Correlation Between Cyber Security and Lipum AB

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

By analyzing existing cross correlation between Cyber Security 1 and Lipum AB, you can compare the effects of market volatilities on Cyber Security and Lipum AB 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 Cyber Security with a short position of Lipum AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cyber Security and Lipum AB.

Diversification Opportunities for Cyber Security and Lipum AB

-0.3

Correlation Coefficient

Cyber Security  Lipum AB

Very good diversification

The 3 months correlation between Cyber and Lipum is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cyber Security 1 and Lipum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipum AB and Cyber Security 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 Cyber Security 1 are associated (or correlated) with Lipum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipum AB has no effect on the direction of Cyber Security i.e., Cyber Security and Lipum AB go up and down completely randomly.

Pair Corralation between Cyber Security and Lipum AB

Assuming the 90 days trading horizon Cyber Security 1 is expected to under-perform the Lipum AB. In addition to that, Cyber Security is 1.4 times more volatile than Lipum AB. It trades about -0.16 of its total potential returns per unit of risk. Lipum AB is currently generating about -0.02 per unit of volatility. If you would invest  1,390  in Lipum AB on September 21, 2024 and sell it today you would lose (100.00) from holding Lipum AB or give up 7.19% of portfolio value over 90 days.

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

Cyber Security 1  vs.  Lipum AB

Cyber Security 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cyber Security 1 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Lipum AB

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Lipum AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lipum AB is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cyber Security and Lipum AB

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

The idea behind Cyber Security 1 and Lipum AB 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.