Correlation Between As Commercial and Lanakam SA

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

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

Diversification Opportunities for As Commercial and Lanakam SA

0.82

Correlation Coefficient

As Commercial  Lanakam SA

Very poor diversification

The 3 months correlation between ASCO and Lanakam is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding As Commercial Industrial and Lanakam SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lanakam SA and As Commercial 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 As Commercial Industrial are associated (or correlated) with Lanakam SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lanakam SA has no effect on the direction of As Commercial i.e., As Commercial and Lanakam SA go up and down completely randomly.

Pair Corralation between As Commercial and Lanakam SA

Assuming the 90 days trading horizon As Commercial is expected to generate 1.04 times less return on investment than Lanakam SA. But when comparing it to its historical volatility, As Commercial Industrial is 2.07 times less risky than Lanakam SA. It trades about 0.07 of its potential returns per unit of risk. Lanakam SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  89.00  in Lanakam SA on December 5, 2024 and sell it today you would earn a total of  6.00  from holding Lanakam SA or generate 6.74% return on investment over 90 days.

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

As Commercial Industrial  vs.  Lanakam SA

As Commercial Industrial

Risk-Adjusted Performance

Good

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

Lanakam SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lanakam SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Lanakam SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with As Commercial and Lanakam SA

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

The idea behind As Commercial Industrial and Lanakam SA 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.