Correlation Between Lumia and ASTRA GRAPHIA

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

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

Diversification Opportunities for Lumia and ASTRA GRAPHIA

0.18

Correlation Coefficient

Lumia  ASTRA GRAPHIA

Average diversification

The 3 months correlation between Lumia and ASTRA is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and ASTRA GRAPHIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASTRA GRAPHIA 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 ASTRA GRAPHIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASTRA GRAPHIA has no effect on the direction of Lumia i.e., Lumia and ASTRA GRAPHIA go up and down completely randomly.

Pair Corralation between Lumia and ASTRA GRAPHIA

Assuming the 90 days trading horizon Lumia is expected to generate 95.3 times more return on investment than ASTRA GRAPHIA. However, Lumia is 95.3 times more volatile than ASTRA GRAPHIA. It trades about 0.21 of its potential returns per unit of risk. ASTRA GRAPHIA is currently generating about 0.01 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	85.71%
Values	Daily Returns

Lumia  vs.  ASTRA GRAPHIA

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.

ASTRA GRAPHIA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASTRA GRAPHIA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ASTRA GRAPHIA is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lumia and ASTRA GRAPHIA

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

The idea behind Lumia and ASTRA GRAPHIA 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.