Correlation Between Lumia and Aqr Alternative

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

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

Diversification Opportunities for Lumia and Aqr Alternative

-0.2

Correlation Coefficient

Lumia  Aqr Alternative

Good diversification

The 3 months correlation between Lumia and Aqr is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Aqr Alternative Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Alternative Risk 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 Aqr Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Alternative Risk has no effect on the direction of Lumia i.e., Lumia and Aqr Alternative go up and down completely randomly.

Pair Corralation between Lumia and Aqr Alternative

Assuming the 90 days trading horizon Lumia is expected to generate 254.95 times more return on investment than Aqr Alternative. However, Lumia is 254.95 times more volatile than Aqr Alternative Risk. It trades about 0.21 of its potential returns per unit of risk. Aqr Alternative Risk is currently generating about -0.09 per unit of risk. If you would invest  0.00  in Lumia on October 9, 2024 and sell it today you would earn a total of  128.00  from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Lumia  vs.  Aqr Alternative Risk

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.

Aqr Alternative Risk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aqr Alternative Risk has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Aqr Alternative is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lumia and Aqr Alternative

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

The idea behind Lumia and Aqr Alternative Risk 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.