Correlation Between Lumia and UNIPHAR PLC

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

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

Diversification Opportunities for Lumia and UNIPHAR PLC

-0.51

Correlation Coefficient

Lumia  UNIPHAR PLC

Excellent diversification

The 3 months correlation between Lumia and UNIPHAR is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and UNIPHAR PLC EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIPHAR PLC EO 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 UNIPHAR PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIPHAR PLC EO has no effect on the direction of Lumia i.e., Lumia and UNIPHAR PLC go up and down completely randomly.

Pair Corralation between Lumia and UNIPHAR PLC

Assuming the 90 days trading horizon Lumia is expected to under-perform the UNIPHAR PLC. In addition to that, Lumia is 2.25 times more volatile than UNIPHAR PLC EO. It trades about -0.3 of its total potential returns per unit of risk. UNIPHAR PLC EO is currently generating about 0.0 per unit of volatility. If you would invest  201.00  in UNIPHAR PLC EO on October 26, 2024 and sell it today you would lose (1.00) from holding UNIPHAR PLC EO or give up 0.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	86.36%
Values	Daily Returns

Lumia  vs.  UNIPHAR PLC EO

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.

UNIPHAR PLC EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNIPHAR PLC EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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 UNIPHAR PLC

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

The idea behind Lumia and UNIPHAR PLC EO 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..