Correlation Between Claranova and Lumibird

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

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

Diversification Opportunities for Claranova and Lumibird

0.04

Correlation Coefficient

Claranova  Lumibird

Significant diversification

The 3 months correlation between Claranova and Lumibird is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Claranova SE and Lumibird SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumibird SA and Claranova 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 Claranova SE are associated (or correlated) with Lumibird. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumibird SA has no effect on the direction of Claranova i.e., Claranova and Lumibird go up and down completely randomly.

Pair Corralation between Claranova and Lumibird

Assuming the 90 days trading horizon Claranova SE is expected to generate 0.64 times more return on investment than Lumibird. However, Claranova SE is 1.55 times less risky than Lumibird. It trades about 0.01 of its potential returns per unit of risk. Lumibird SA is currently generating about -0.03 per unit of risk. If you would invest  149.00  in Claranova SE on September 3, 2024 and sell it today you would lose (2.00) from holding Claranova SE or give up 1.34% of portfolio value over 90 days.

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

Claranova SE  vs.  Lumibird SA

Claranova SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Claranova SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Claranova is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lumibird SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lumibird SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Claranova and Lumibird

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

The idea behind Claranova SE and Lumibird 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.