Correlation Between Lumia and Goldstone Technologies

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

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

Diversification Opportunities for Lumia and Goldstone Technologies

0.34

Correlation Coefficient

Lumia  Goldstone Technologies

Weak diversification

The 3 months correlation between Lumia and Goldstone is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Goldstone Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldstone Technologies 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 Goldstone Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldstone Technologies has no effect on the direction of Lumia i.e., Lumia and Goldstone Technologies go up and down completely randomly.

Pair Corralation between Lumia and Goldstone Technologies

Assuming the 90 days trading horizon Lumia is expected to generate 41.88 times more return on investment than Goldstone Technologies. However, Lumia is 41.88 times more volatile than Goldstone Technologies Limited. It trades about 0.12 of its potential returns per unit of risk. Goldstone Technologies Limited is currently generating about -0.11 per unit of risk. If you would invest  0.00  in Lumia on October 9, 2024 and sell it today you would earn a total of  145.00  from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Lumia  vs.  Goldstone Technologies Limited

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.

Goldstone Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldstone Technologies Limited 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 Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Lumia and Goldstone Technologies

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

The idea behind Lumia and Goldstone Technologies Limited 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 Transaction History module to view history of all your transactions and understand their impact on performance.