Correlation Between Lumia and SeAH Besteel

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

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

Diversification Opportunities for Lumia and SeAH Besteel

-0.49

Correlation Coefficient

Lumia  SeAH Besteel

Very good diversification

The 3 months correlation between Lumia and SeAH is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and SeAH Besteel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SeAH Besteel Corp and Lumia 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 Lumia are associated (or correlated) with SeAH Besteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SeAH Besteel Corp has no effect on the direction of Lumia i.e., Lumia and SeAH Besteel go up and down completely randomly.

Pair Corralation between Lumia and SeAH Besteel

Assuming the 90 days trading horizon Lumia is expected to generate 13.83 times more return on investment than SeAH Besteel. However, Lumia is 13.83 times more volatile than SeAH Besteel Corp. It trades about 0.04 of its potential returns per unit of risk. SeAH Besteel Corp is currently generating about 0.03 per unit of risk. If you would invest  0.00  in Lumia on October 24, 2024 and sell it today you would earn a total of  101.00  from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.34%
Values	Daily Returns

Lumia  vs.  SeAH Besteel Corp

Lumia

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lumia are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Lumia exhibited solid returns over the last few months and may actually be approaching a breakup point.

SeAH Besteel Corp

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Lumia and SeAH Besteel

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

The idea behind Lumia and SeAH Besteel Corp 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.