Correlation Between Iochpe Maxion and Luminar Technologies

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

By analyzing existing cross correlation between Iochpe Maxion SA and Luminar Technologies, you can compare the effects of market volatilities on Iochpe Maxion and Luminar Technologies 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 Iochpe Maxion with a short position of Luminar Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iochpe Maxion and Luminar Technologies.

Diversification Opportunities for Iochpe Maxion and Luminar Technologies

0.0

Correlation Coefficient

Iochpe Maxion  Luminar Technologies

Pay attention - limited upside

The 3 months correlation between Iochpe and Luminar is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Iochpe Maxion SA and Luminar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luminar Technologies and Iochpe Maxion 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 Iochpe Maxion SA are associated (or correlated) with Luminar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luminar Technologies has no effect on the direction of Iochpe Maxion i.e., Iochpe Maxion and Luminar Technologies go up and down completely randomly.

Pair Corralation between Iochpe Maxion and Luminar Technologies

If you would invest  504.00  in Luminar Technologies on December 21, 2024 and sell it today you would earn a total of  229.00  from holding Luminar Technologies or generate 45.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Iochpe Maxion SA  vs.  Luminar Technologies

Iochpe Maxion SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iochpe Maxion SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking indicators, Iochpe Maxion is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Luminar Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Luminar Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Luminar Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iochpe Maxion and Luminar Technologies

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

The idea behind Iochpe Maxion SA and Luminar Technologies 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.