Correlation Between Lumia and AFFLUENT MEDICAL

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

By analyzing existing cross correlation between Lumia and AFFLUENT MEDICAL SAS, you can compare the effects of market volatilities on Lumia and AFFLUENT MEDICAL 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 AFFLUENT MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and AFFLUENT MEDICAL.

Diversification Opportunities for Lumia and AFFLUENT MEDICAL

-0.83

Correlation Coefficient

Lumia  AFFLUENT MEDICAL

Pay attention - limited upside

The 3 months correlation between Lumia and AFFLUENT is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and AFFLUENT MEDICAL SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFFLUENT MEDICAL SAS 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 AFFLUENT MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFFLUENT MEDICAL SAS has no effect on the direction of Lumia i.e., Lumia and AFFLUENT MEDICAL go up and down completely randomly.

Pair Corralation between Lumia and AFFLUENT MEDICAL

Assuming the 90 days trading horizon Lumia is expected to generate 7.34 times more return on investment than AFFLUENT MEDICAL. However, Lumia is 7.34 times more volatile than AFFLUENT MEDICAL SAS. It trades about 0.04 of its potential returns per unit of risk. AFFLUENT MEDICAL SAS is currently generating about 0.02 per unit of risk. If you would invest  0.00  in Lumia on October 11, 2024 and sell it today you would earn a total of  117.00  from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	97.66%
Values	Daily Returns

Lumia  vs.  AFFLUENT MEDICAL SAS

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.

AFFLUENT MEDICAL SAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AFFLUENT MEDICAL SAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Lumia and AFFLUENT MEDICAL

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

The idea behind Lumia and AFFLUENT MEDICAL SAS 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.