Correlation Between Lumia and Publity AG

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

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

Diversification Opportunities for Lumia and Publity AG

0.18

Correlation Coefficient

Lumia  Publity AG

Average diversification

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

Pair Corralation between Lumia and Publity AG

Assuming the 90 days trading horizon Lumia is expected to generate 9.82 times more return on investment than Publity AG. However, Lumia is 9.82 times more volatile than Publity AG. It trades about 0.14 of its potential returns per unit of risk. Publity AG is currently generating about 0.15 per unit of risk. If you would invest  0.00  in Lumia on October 25, 2024 and sell it today you would earn a total of  95.00  from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.

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

Lumia  vs.  Publity AG

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.

Publity AG

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Publity AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Publity AG unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lumia and Publity AG

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

The idea behind Lumia and Publity AG 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..