Correlation Between Lyxor 1 and CHAODA MODERN

Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and CHAODA MODERN 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 Lyxor 1 and CHAODA MODERN into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Lyxor 1 and CHAODA MODERN

-0.54

Correlation Coefficient

Lyxor 1  CHAODA MODERN

Excellent diversification

The 3 months correlation between Lyxor and CHAODA is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and CHAODA MODERN AGRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAODA MODERN AGRI and Lyxor 1 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 Lyxor 1 are associated (or correlated) with CHAODA MODERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAODA MODERN AGRI has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and CHAODA MODERN go up and down completely randomly.

Pair Corralation between Lyxor 1 and CHAODA MODERN

Assuming the 90 days trading horizon Lyxor 1 is expected to generate 0.08 times more return on investment than CHAODA MODERN. However, Lyxor 1 is 12.27 times less risky than CHAODA MODERN. It trades about 0.16 of its potential returns per unit of risk. CHAODA MODERN AGRI is currently generating about -0.01 per unit of risk. If you would invest  2,368  in Lyxor 1 on September 20, 2024 and sell it today you would earn a total of  192.00  from holding Lyxor 1 or generate 8.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Lyxor 1   vs.  CHAODA MODERN AGRI

Lyxor 1

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 1 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Lyxor 1 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CHAODA MODERN AGRI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHAODA MODERN AGRI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Lyxor 1 and CHAODA MODERN

The main advantage of trading using opposite Lyxor 1 and CHAODA MODERN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, CHAODA MODERN 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 CHAODA MODERN will offset losses from the drop in CHAODA MODERN's long position.

The idea behind Lyxor 1 and CHAODA MODERN AGRI 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.