Correlation Between Lumia and Pakistan Oilfields

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

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

Diversification Opportunities for Lumia and Pakistan Oilfields

0.63

Correlation Coefficient

Lumia  Pakistan Oilfields

Poor diversification

The 3 months correlation between Lumia and Pakistan is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Pakistan Oilfields in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Oilfields 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 Pakistan Oilfields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Oilfields has no effect on the direction of Lumia i.e., Lumia and Pakistan Oilfields go up and down completely randomly.

Pair Corralation between Lumia and Pakistan Oilfields

Assuming the 90 days trading horizon Lumia is expected to under-perform the Pakistan Oilfields. In addition to that, Lumia is 7.5 times more volatile than Pakistan Oilfields. It trades about -0.2 of its total potential returns per unit of risk. Pakistan Oilfields is currently generating about -0.15 per unit of volatility. If you would invest  61,712  in Pakistan Oilfields on December 24, 2024 and sell it today you would lose (5,679) from holding Pakistan Oilfields or give up 9.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

Lumia  vs.  Pakistan Oilfields

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 unsteady 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.

Pakistan Oilfields

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pakistan Oilfields has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Lumia and Pakistan Oilfields

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

The idea behind Lumia and Pakistan Oilfields 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.