Correlation Between COMBA TELECOM and Lennar

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

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

Diversification Opportunities for COMBA TELECOM and Lennar

-0.81

Correlation Coefficient

COMBA TELECOM  Lennar

Pay attention - limited upside

The 3 months correlation between COMBA and Lennar is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding COMBA TELECOM SYST and Lennar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennar and COMBA TELECOM 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 COMBA TELECOM SYST are associated (or correlated) with Lennar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lennar has no effect on the direction of COMBA TELECOM i.e., COMBA TELECOM and Lennar go up and down completely randomly.

Pair Corralation between COMBA TELECOM and Lennar

Assuming the 90 days trading horizon COMBA TELECOM SYST is expected to generate 1.67 times more return on investment than Lennar. However, COMBA TELECOM is 1.67 times more volatile than Lennar. It trades about 0.17 of its potential returns per unit of risk. Lennar is currently generating about -0.12 per unit of risk. If you would invest  15.00  in COMBA TELECOM SYST on December 29, 2024 and sell it today you would earn a total of  6.00  from holding COMBA TELECOM SYST or generate 40.0% return on investment over 90 days.

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

COMBA TELECOM SYST  vs.  Lennar

COMBA TELECOM SYST

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in COMBA TELECOM SYST are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, COMBA TELECOM unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lennar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lennar 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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with COMBA TELECOM and Lennar

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

The idea behind COMBA TELECOM SYST and Lennar 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.