Correlation Between Data International and Lumax International

Can any of the company-specific risk be diversified away by investing in both Data International and Lumax International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Data International and Lumax International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Data International Co and Lumax International Corp, you can compare the effects of market volatilities on Data International and Lumax International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Data International with a short position of Lumax International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Data International and Lumax International.

Diversification Opportunities for Data International and Lumax International

0.4

Correlation Coefficient

Data International  Lumax International

Very weak diversification

The 3 months correlation between Data and Lumax is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Data International Co and Lumax International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumax International Corp and Data International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Data International Co are associated (or correlated) with Lumax International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumax International Corp has no effect on the direction of Data International i.e., Data International and Lumax International go up and down completely randomly.

Pair Corralation between Data International and Lumax International

Assuming the 90 days trading horizon Data International Co is expected to generate 2.48 times more return on investment than Lumax International. However, Data International is 2.48 times more volatile than Lumax International Corp. It trades about 0.1 of its potential returns per unit of risk. Lumax International Corp is currently generating about 0.05 per unit of risk. If you would invest  2,668  in Data International Co on October 23, 2024 and sell it today you would earn a total of  9,782  from holding Data International Co or generate 366.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Data International Co  vs.  Lumax International Corp

Data International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Data International Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Lumax International Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lumax International Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Lumax International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Data International and Lumax International

The main advantage of trading using opposite Data International and Lumax International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Data International position performs unexpectedly, Lumax International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lumax International will offset losses from the drop in Lumax International's long position.

The idea behind Data International Co and Lumax International Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.