Correlation Between Lumia and Highpeak Energy

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

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

Diversification Opportunities for Lumia and Highpeak Energy

0.09

Correlation Coefficient

Lumia  Highpeak Energy

Significant diversification

The 3 months correlation between Lumia and Highpeak is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Highpeak Energy Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highpeak Energy Acqu 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 Highpeak Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highpeak Energy Acqu has no effect on the direction of Lumia i.e., Lumia and Highpeak Energy go up and down completely randomly.

Pair Corralation between Lumia and Highpeak Energy

Assuming the 90 days trading horizon Lumia is expected to generate 12.73 times more return on investment than Highpeak Energy. However, Lumia is 12.73 times more volatile than Highpeak Energy Acquisition. It trades about 0.04 of its potential returns per unit of risk. Highpeak Energy Acquisition is currently generating about -0.02 per unit of risk. If you would invest  0.00  in Lumia on October 10, 2024 and sell it today you would earn a total of  128.00  from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.68%
Values	Daily Returns

Lumia  vs.  Highpeak Energy Acquisition

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.

Highpeak Energy Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Highpeak Energy Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Highpeak Energy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Lumia and Highpeak Energy

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

The idea behind Lumia and Highpeak Energy Acquisition 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.