Correlation Between Lyxor 1 and SIKA AG

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

By analyzing existing cross correlation between Lyxor 1 and SIKA AG UNSPADR, you can compare the effects of market volatilities on Lyxor 1 and SIKA AG 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 SIKA AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and SIKA AG.

Diversification Opportunities for Lyxor 1 and SIKA AG

0.54

Correlation Coefficient

Lyxor 1  SIKA AG

Very weak diversification

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

Pair Corralation between Lyxor 1 and SIKA AG

Assuming the 90 days trading horizon Lyxor 1 is expected to generate 0.34 times more return on investment than SIKA AG. However, Lyxor 1 is 2.95 times less risky than SIKA AG. It trades about 0.13 of its potential returns per unit of risk. SIKA AG UNSPADR is currently generating about 0.04 per unit of risk. If you would invest  2,481  in Lyxor 1 on December 29, 2024 and sell it today you would earn a total of  204.00  from holding Lyxor 1 or generate 8.22% return on investment over 90 days.

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

Lyxor 1   vs.  SIKA AG UNSPADR

Lyxor 1

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 1 are ranked lower than 10 (%) 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 April 2025.

SIKA AG UNSPADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SIKA AG UNSPADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, SIKA AG may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Lyxor 1 and SIKA AG

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

The idea behind Lyxor 1 and SIKA AG UNSPADR 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.