Correlation Between LQwD FinTech and Automotive Properties

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

By analyzing existing cross correlation between LQwD FinTech Corp and Automotive Properties Real, you can compare the effects of market volatilities on LQwD FinTech and Automotive Properties 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 LQwD FinTech with a short position of Automotive Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of LQwD FinTech and Automotive Properties.

Diversification Opportunities for LQwD FinTech and Automotive Properties

-0.25

Correlation Coefficient

LQwD FinTech  Automotive Properties

Very good diversification

The 3 months correlation between LQwD and Automotive is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding LQwD FinTech Corp and Automotive Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automotive Properties and LQwD FinTech 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 LQwD FinTech Corp are associated (or correlated) with Automotive Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automotive Properties has no effect on the direction of LQwD FinTech i.e., LQwD FinTech and Automotive Properties go up and down completely randomly.

Pair Corralation between LQwD FinTech and Automotive Properties

Assuming the 90 days trading horizon LQwD FinTech Corp is expected to generate 6.05 times more return on investment than Automotive Properties. However, LQwD FinTech is 6.05 times more volatile than Automotive Properties Real. It trades about 0.24 of its potential returns per unit of risk. Automotive Properties Real is currently generating about 0.03 per unit of risk. If you would invest  57.00  in LQwD FinTech Corp on September 3, 2024 and sell it today you would earn a total of  93.00  from holding LQwD FinTech Corp or generate 163.16% return on investment over 90 days.

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

LQwD FinTech Corp  vs.  Automotive Properties Real

LQwD FinTech Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LQwD FinTech Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, LQwD FinTech showed solid returns over the last few months and may actually be approaching a breakup point.

Automotive Properties

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Automotive Properties Real are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Automotive Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LQwD FinTech and Automotive Properties

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

The idea behind LQwD FinTech Corp and Automotive Properties Real 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.