Correlation Between Adcore and Lumine

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

By analyzing existing cross correlation between Adcore Inc and Lumine Group, you can compare the effects of market volatilities on Adcore and Lumine 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 Adcore with a short position of Lumine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adcore and Lumine.

Diversification Opportunities for Adcore and Lumine

-0.18

Correlation Coefficient

Adcore  Lumine

Good diversification

The 3 months correlation between Adcore and Lumine is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Adcore Inc and Lumine Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumine Group and Adcore 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 Adcore Inc are associated (or correlated) with Lumine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumine Group has no effect on the direction of Adcore i.e., Adcore and Lumine go up and down completely randomly.

Pair Corralation between Adcore and Lumine

Assuming the 90 days trading horizon Adcore Inc is expected to generate 3.23 times more return on investment than Lumine. However, Adcore is 3.23 times more volatile than Lumine Group. It trades about 0.16 of its potential returns per unit of risk. Lumine Group is currently generating about 0.13 per unit of risk. If you would invest  18.00  in Adcore Inc on October 20, 2024 and sell it today you would earn a total of  16.00  from holding Adcore Inc or generate 88.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Adcore Inc  vs.  Lumine Group

Adcore Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adcore Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Adcore displayed solid returns over the last few months and may actually be approaching a breakup point.

Lumine Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lumine Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lumine showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adcore and Lumine

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

The idea behind Adcore Inc and Lumine Group 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.