Correlation Between Lumia and Flagship Communities

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

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

Diversification Opportunities for Lumia and Flagship Communities

0.08

Correlation Coefficient

Lumia  Flagship Communities

Significant diversification

The 3 months correlation between Lumia and Flagship is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Flagship Communities Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flagship Communities Real 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 Flagship Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flagship Communities Real has no effect on the direction of Lumia i.e., Lumia and Flagship Communities go up and down completely randomly.

Pair Corralation between Lumia and Flagship Communities

Assuming the 90 days trading horizon Lumia is expected to under-perform the Flagship Communities. In addition to that, Lumia is 3.93 times more volatile than Flagship Communities Real. It trades about -0.25 of its total potential returns per unit of risk. Flagship Communities Real is currently generating about -0.21 per unit of volatility. If you would invest  1,520  in Flagship Communities Real on October 26, 2024 and sell it today you would lose (85.00) from holding Flagship Communities Real or give up 5.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Lumia  vs.  Flagship Communities Real

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.

Flagship Communities Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flagship Communities Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Flagship Communities is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lumia and Flagship Communities

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

The idea behind Lumia and Flagship Communities Real 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.