Correlation Between Lipum AB and Starbreeze

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

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

Diversification Opportunities for Lipum AB and Starbreeze

-0.31

Correlation Coefficient

Lipum AB  Starbreeze

Very good diversification

The 3 months correlation between Lipum and Starbreeze is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lipum AB and Starbreeze AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbreeze AB and Lipum AB 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 Lipum AB are associated (or correlated) with Starbreeze. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbreeze AB has no effect on the direction of Lipum AB i.e., Lipum AB and Starbreeze go up and down completely randomly.

Pair Corralation between Lipum AB and Starbreeze

Assuming the 90 days trading horizon Lipum AB is expected to generate 0.5 times more return on investment than Starbreeze. However, Lipum AB is 1.99 times less risky than Starbreeze. It trades about 0.1 of its potential returns per unit of risk. Starbreeze AB is currently generating about -0.02 per unit of risk. If you would invest  865.00  in Lipum AB on September 24, 2024 and sell it today you would earn a total of  425.00  from holding Lipum AB or generate 49.13% return on investment over 90 days.

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

Lipum AB  vs.  Starbreeze AB

Lipum AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lipum AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lipum AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Starbreeze AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Starbreeze AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lipum AB and Starbreeze

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

The idea behind Lipum AB and Starbreeze AB 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .