Correlation Between Deneb Investments and Lewis Group

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

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

Diversification Opportunities for Deneb Investments and Lewis Group

0.01

Correlation Coefficient

Deneb Investments  Lewis Group

Significant diversification

The 3 months correlation between Deneb and Lewis is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Deneb Investments and Lewis Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lewis Group Limited and Deneb Investments 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 Deneb Investments are associated (or correlated) with Lewis Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lewis Group Limited has no effect on the direction of Deneb Investments i.e., Deneb Investments and Lewis Group go up and down completely randomly.

Pair Corralation between Deneb Investments and Lewis Group

Assuming the 90 days trading horizon Deneb Investments is expected to under-perform the Lewis Group. In addition to that, Deneb Investments is 2.09 times more volatile than Lewis Group Limited. It trades about -0.33 of its total potential returns per unit of risk. Lewis Group Limited is currently generating about -0.2 per unit of volatility. If you would invest  825,000  in Lewis Group Limited on September 29, 2024 and sell it today you would lose (41,900) from holding Lewis Group Limited or give up 5.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Deneb Investments  vs.  Lewis Group Limited

Deneb Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deneb Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Lewis Group Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lewis Group Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Lewis Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Deneb Investments and Lewis Group

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

The idea behind Deneb Investments and Lewis Group Limited 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 Commodity Directory module to find actively traded commodities issued by global exchanges.