Correlation Between AdCapital and LUMI GRUPPEN

Can any of the company-specific risk be diversified away by investing in both AdCapital and LUMI GRUPPEN 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 AdCapital and LUMI GRUPPEN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AdCapital AG and LUMI GRUPPEN AS, you can compare the effects of market volatilities on AdCapital and LUMI GRUPPEN 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 AdCapital with a short position of LUMI GRUPPEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdCapital and LUMI GRUPPEN.

Diversification Opportunities for AdCapital and LUMI GRUPPEN

-0.85

Correlation Coefficient

AdCapital  LUMI GRUPPEN

Pay attention - limited upside

The 3 months correlation between AdCapital and LUMI is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding AdCapital AG and LUMI GRUPPEN AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUMI GRUPPEN AS and AdCapital 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 AdCapital AG are associated (or correlated) with LUMI GRUPPEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUMI GRUPPEN AS has no effect on the direction of AdCapital i.e., AdCapital and LUMI GRUPPEN go up and down completely randomly.

Pair Corralation between AdCapital and LUMI GRUPPEN

Assuming the 90 days horizon AdCapital is expected to generate 2.39 times less return on investment than LUMI GRUPPEN. But when comparing it to its historical volatility, AdCapital AG is 1.74 times less risky than LUMI GRUPPEN. It trades about 0.02 of its potential returns per unit of risk. LUMI GRUPPEN AS is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  96.00  in LUMI GRUPPEN AS on October 20, 2024 and sell it today you would earn a total of  13.00  from holding LUMI GRUPPEN AS or generate 13.54% return on investment over 90 days.

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

AdCapital AG  vs.  LUMI GRUPPEN AS

AdCapital AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdCapital AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

LUMI GRUPPEN AS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LUMI GRUPPEN AS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, LUMI GRUPPEN reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AdCapital and LUMI GRUPPEN

The main advantage of trading using opposite AdCapital and LUMI GRUPPEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdCapital position performs unexpectedly, LUMI GRUPPEN 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 LUMI GRUPPEN will offset losses from the drop in LUMI GRUPPEN's long position.

The idea behind AdCapital AG and LUMI GRUPPEN AS 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.