Correlation Between Lumia and SCHMID Group

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

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

Diversification Opportunities for Lumia and SCHMID Group

0.42

Correlation Coefficient

Lumia  SCHMID Group

Very weak diversification

The 3 months correlation between Lumia and SCHMID is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and SCHMID Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCHMID Group NV 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 SCHMID Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCHMID Group NV has no effect on the direction of Lumia i.e., Lumia and SCHMID Group go up and down completely randomly.

Pair Corralation between Lumia and SCHMID Group

Assuming the 90 days trading horizon Lumia is expected to generate 7.18 times more return on investment than SCHMID Group. However, Lumia is 7.18 times more volatile than SCHMID Group NV. It trades about 0.04 of its potential returns per unit of risk. SCHMID Group NV is currently generating about -0.08 per unit of risk. 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	Moves Together
Strength	Weak
Accuracy	34.18%
Values	Daily Returns

Lumia  vs.  SCHMID Group NV

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.

SCHMID Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCHMID Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Lumia and SCHMID Group

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

The idea behind Lumia and SCHMID Group NV 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.