Correlation Between Lumia and PreveCeutical Medical

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

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

Diversification Opportunities for Lumia and PreveCeutical Medical

0.46

Correlation Coefficient

Lumia  PreveCeutical Medical

Very weak diversification

The 3 months correlation between Lumia and PreveCeutical is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and PreveCeutical Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PreveCeutical Medical 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 PreveCeutical Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PreveCeutical Medical has no effect on the direction of Lumia i.e., Lumia and PreveCeutical Medical go up and down completely randomly.

Pair Corralation between Lumia and PreveCeutical Medical

Assuming the 90 days trading horizon Lumia is expected to under-perform the PreveCeutical Medical. But the crypto coin apears to be less risky and, when comparing its historical volatility, Lumia is 1.82 times less risky than PreveCeutical Medical. The crypto coin trades about -0.18 of its potential returns per unit of risk. The PreveCeutical Medical is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.79  in PreveCeutical Medical on December 23, 2024 and sell it today you would lose (0.10) from holding PreveCeutical Medical or give up 5.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.85%
Values	Daily Returns

Lumia  vs.  PreveCeutical Medical

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.

PreveCeutical Medical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PreveCeutical Medical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, PreveCeutical Medical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lumia and PreveCeutical Medical

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

The idea behind Lumia and PreveCeutical Medical 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.