Correlation Between Lumia and Rmy Cointreau

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

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

Diversification Opportunities for Lumia and Rmy Cointreau

-0.11

Correlation Coefficient

Lumia  Rmy Cointreau

Good diversification

The 3 months correlation between Lumia and Rmy is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Rmy Cointreau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rmy Cointreau SA 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 Rmy Cointreau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rmy Cointreau SA has no effect on the direction of Lumia i.e., Lumia and Rmy Cointreau go up and down completely randomly.

Pair Corralation between Lumia and Rmy Cointreau

Assuming the 90 days trading horizon Lumia is expected to generate 13.4 times more return on investment than Rmy Cointreau. However, Lumia is 13.4 times more volatile than Rmy Cointreau SA. It trades about 0.04 of its potential returns per unit of risk. Rmy Cointreau SA is currently generating about -0.07 per unit of risk. If you would invest  0.00  in Lumia on October 11, 2024 and sell it today you would earn a total of  120.00  from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.34%
Values	Daily Returns

Lumia  vs.  Rmy Cointreau SA

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.

Rmy Cointreau SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rmy Cointreau SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Lumia and Rmy Cointreau

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

The idea behind Lumia and Rmy Cointreau SA 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.