Correlation Between Lumia and New Zealand

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

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

Diversification Opportunities for Lumia and New Zealand

0.57

Correlation Coefficient

Lumia  New Zealand

Very weak diversification

The 3 months correlation between Lumia and New is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and New Zealand Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Zealand Energy 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 New Zealand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Zealand Energy has no effect on the direction of Lumia i.e., Lumia and New Zealand go up and down completely randomly.

Pair Corralation between Lumia and New Zealand

Assuming the 90 days trading horizon Lumia is expected to under-perform the New Zealand. But the crypto coin apears to be less risky and, when comparing its historical volatility, Lumia is 1.3 times less risky than New Zealand. The crypto coin trades about -0.32 of its potential returns per unit of risk. The New Zealand Energy is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  94.00  in New Zealand Energy on October 25, 2024 and sell it today you would lose (12.00) from holding New Zealand Energy or give up 12.77% of portfolio value over 90 days.

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

Lumia  vs.  New Zealand Energy

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.

New Zealand Energy

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in New Zealand Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, New Zealand showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lumia and New Zealand

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

The idea behind Lumia and New Zealand Energy 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.