Correlation Between Luminar Technologies and Knorr-Bremse Aktiengesellscha

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

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

Diversification Opportunities for Luminar Technologies and Knorr-Bremse Aktiengesellscha

0.61

Correlation Coefficient

Luminar Technologies  Knorr-Bremse Aktiengesellscha

Poor diversification

The 3 months correlation between Luminar and Knorr-Bremse is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Luminar Technologies and Knorr Bremse Aktiengesellschaf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knorr-Bremse Aktiengesellscha and Luminar Technologies 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 Luminar Technologies are associated (or correlated) with Knorr-Bremse Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knorr-Bremse Aktiengesellscha has no effect on the direction of Luminar Technologies i.e., Luminar Technologies and Knorr-Bremse Aktiengesellscha go up and down completely randomly.

Pair Corralation between Luminar Technologies and Knorr-Bremse Aktiengesellscha

Given the investment horizon of 90 days Luminar Technologies is expected to under-perform the Knorr-Bremse Aktiengesellscha. In addition to that, Luminar Technologies is 4.75 times more volatile than Knorr Bremse Aktiengesellschaft. It trades about -0.23 of its total potential returns per unit of risk. Knorr Bremse Aktiengesellschaft is currently generating about -0.14 per unit of volatility. If you would invest  1,949  in Knorr Bremse Aktiengesellschaft on October 7, 2024 and sell it today you would lose (163.00) from holding Knorr Bremse Aktiengesellschaft or give up 8.36% of portfolio value over 90 days.

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

Luminar Technologies  vs.  Knorr Bremse Aktiengesellschaf

Luminar Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Luminar Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Knorr-Bremse Aktiengesellscha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Knorr Bremse Aktiengesellschaft 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 fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Luminar Technologies and Knorr-Bremse Aktiengesellscha

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

The idea behind Luminar Technologies and Knorr Bremse Aktiengesellschaft 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 Channel module to use Commodity Channel Index to analyze current equity momentum.