Correlation Between Lumia and Iberpapel Gestion

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

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

Diversification Opportunities for Lumia and Iberpapel Gestion

-0.52

Correlation Coefficient

Lumia  Iberpapel Gestion

Excellent diversification

The 3 months correlation between Lumia and Iberpapel is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Iberpapel Gestion SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iberpapel Gestion 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 Iberpapel Gestion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iberpapel Gestion has no effect on the direction of Lumia i.e., Lumia and Iberpapel Gestion go up and down completely randomly.

Pair Corralation between Lumia and Iberpapel Gestion

Assuming the 90 days trading horizon Lumia is expected to under-perform the Iberpapel Gestion. In addition to that, Lumia is 6.76 times more volatile than Iberpapel Gestion SA. It trades about -0.18 of its total potential returns per unit of risk. Iberpapel Gestion SA is currently generating about 0.15 per unit of volatility. If you would invest  1,840  in Iberpapel Gestion SA on December 23, 2024 and sell it today you would earn a total of  190.00  from holding Iberpapel Gestion SA or generate 10.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.92%
Values	Daily Returns

Lumia  vs.  Iberpapel Gestion SA

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 weak 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.

Iberpapel Gestion

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iberpapel Gestion SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Iberpapel Gestion may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Lumia and Iberpapel Gestion

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

The idea behind Lumia and Iberpapel Gestion SA 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.