Correlation Between Lumia and Fundo De

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

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

Diversification Opportunities for Lumia and Fundo De

-0.7

Correlation Coefficient

Lumia  Fundo De

Excellent diversification

The 3 months correlation between Lumia and Fundo is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Fundo de Investimento in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundo de Investimento 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 Fundo De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundo de Investimento has no effect on the direction of Lumia i.e., Lumia and Fundo De go up and down completely randomly.

Pair Corralation between Lumia and Fundo De

Assuming the 90 days trading horizon Lumia is expected to generate 45.4 times more return on investment than Fundo De. However, Lumia is 45.4 times more volatile than Fundo de Investimento. It trades about 0.12 of its potential returns per unit of risk. Fundo de Investimento is currently generating about -0.03 per unit of risk. If you would invest  0.00  in Lumia on October 23, 2024 and sell it today you would earn a total of  100.00  from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

Lumia  vs.  Fundo de Investimento

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.

Fundo de Investimento

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fundo de Investimento has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Fundo De 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 Fundo De

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

The idea behind Lumia and Fundo de Investimento 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.