Correlation Between Lumia and Alexander Forbes

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

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

Diversification Opportunities for Lumia and Alexander Forbes

0.12

Correlation Coefficient

Lumia  Alexander Forbes

Average diversification

The 3 months correlation between Lumia and Alexander is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Alexander Forbes Grp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexander Forbes Grp 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 Alexander Forbes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexander Forbes Grp has no effect on the direction of Lumia i.e., Lumia and Alexander Forbes go up and down completely randomly.

Pair Corralation between Lumia and Alexander Forbes

Assuming the 90 days trading horizon Lumia is expected to under-perform the Alexander Forbes. In addition to that, Lumia is 2.93 times more volatile than Alexander Forbes Grp. It trades about -0.18 of its total potential returns per unit of risk. Alexander Forbes Grp is currently generating about 0.02 per unit of volatility. If you would invest  81,400  in Alexander Forbes Grp on December 23, 2024 and sell it today you would earn a total of  400.00  from holding Alexander Forbes Grp or generate 0.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Lumia  vs.  Alexander Forbes Grp

Lumia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lumia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Lumia shareholders.

Alexander Forbes Grp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alexander Forbes Grp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Alexander Forbes is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lumia and Alexander Forbes

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

The idea behind Lumia and Alexander Forbes Grp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.