Correlation Between Idsud SA and Lucibel

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

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

Diversification Opportunities for Idsud SA and Lucibel

-0.33

Correlation Coefficient

Idsud SA  Lucibel

Very good diversification

The 3 months correlation between Idsud and Lucibel is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Idsud SA and Lucibel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucibel and Idsud SA 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 Idsud SA are associated (or correlated) with Lucibel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucibel has no effect on the direction of Idsud SA i.e., Idsud SA and Lucibel go up and down completely randomly.

Pair Corralation between Idsud SA and Lucibel

Assuming the 90 days trading horizon Idsud SA is expected to generate 0.24 times more return on investment than Lucibel. However, Idsud SA is 4.09 times less risky than Lucibel. It trades about 0.12 of its potential returns per unit of risk. Lucibel is currently generating about 0.02 per unit of risk. If you would invest  19,105  in Idsud SA on December 29, 2024 and sell it today you would earn a total of  2,895  from holding Idsud SA or generate 15.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Idsud SA  vs.  Lucibel

Idsud SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Idsud SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Idsud SA reported solid returns over the last few months and may actually be approaching a breakup point.

Lucibel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lucibel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Lucibel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Idsud SA and Lucibel

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

The idea behind Idsud SA and Lucibel 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.