Correlation Between Luminar Technologies and Superior Industries

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

By analyzing existing cross correlation between Luminar Technologies and Superior Industries International, you can compare the effects of market volatilities on Luminar Technologies and Superior Industries 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 Superior Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luminar Technologies and Superior Industries.

Diversification Opportunities for Luminar Technologies and Superior Industries

0.32

Correlation Coefficient

Luminar Technologies  Superior Industries

Weak diversification

The 3 months correlation between Luminar and Superior is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Luminar Technologies and Superior Industries Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Industries 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 Superior Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Industries has no effect on the direction of Luminar Technologies i.e., Luminar Technologies and Superior Industries go up and down completely randomly.

Pair Corralation between Luminar Technologies and Superior Industries

Given the investment horizon of 90 days Luminar Technologies is expected to generate 2.07 times more return on investment than Superior Industries. However, Luminar Technologies is 2.07 times more volatile than Superior Industries International. It trades about 0.06 of its potential returns per unit of risk. Superior Industries International is currently generating about 0.05 per unit of risk. If you would invest  546.00  in Luminar Technologies on December 29, 2024 and sell it today you would earn a total of  56.00  from holding Luminar Technologies or generate 10.26% return on investment over 90 days.

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

Luminar Technologies  vs.  Superior Industries Internatio

Luminar Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Luminar Technologies are ranked lower than 5 (%) 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.

Superior Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Superior Industries International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Superior Industries reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Luminar Technologies and Superior Industries

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

The idea behind Luminar Technologies and Superior Industries International 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.