Correlation Between Lumia and Shanghai Industrial

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

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

Diversification Opportunities for Lumia and Shanghai Industrial

0.0

Correlation Coefficient

Lumia  Shanghai Industrial

Pay attention - limited upside

The 3 months correlation between Lumia and Shanghai is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Shanghai Industrial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Industrial 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 Shanghai Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Industrial has no effect on the direction of Lumia i.e., Lumia and Shanghai Industrial go up and down completely randomly.

Pair Corralation between Lumia and Shanghai Industrial

If you would invest  0.00  in Lumia on October 10, 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	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Lumia  vs.  Shanghai Industrial Holdings

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.

Shanghai Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shanghai Industrial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Shanghai Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lumia and Shanghai Industrial

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

The idea behind Lumia and Shanghai Industrial Holdings 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.