Correlation Between Lumia and TELEKOM NETWORK

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

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

Diversification Opportunities for Lumia and TELEKOM NETWORK

0.38

Correlation Coefficient

Lumia  TELEKOM NETWORK

Weak diversification

The 3 months correlation between Lumia and TELEKOM is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and TELEKOM NETWORK MALAWI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELEKOM NETWORK MALAWI 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 TELEKOM NETWORK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TELEKOM NETWORK MALAWI has no effect on the direction of Lumia i.e., Lumia and TELEKOM NETWORK go up and down completely randomly.

Pair Corralation between Lumia and TELEKOM NETWORK

Assuming the 90 days trading horizon Lumia is expected to generate 20.06 times more return on investment than TELEKOM NETWORK. However, Lumia is 20.06 times more volatile than TELEKOM NETWORK MALAWI. It trades about 0.04 of its potential returns per unit of risk. TELEKOM NETWORK MALAWI is currently generating about 0.06 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  120.00  from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.71%
Values	Daily Returns

Lumia  vs.  TELEKOM NETWORK MALAWI

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.

TELEKOM NETWORK MALAWI

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TELEKOM NETWORK MALAWI are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, TELEKOM NETWORK exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lumia and TELEKOM NETWORK

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

The idea behind Lumia and TELEKOM NETWORK MALAWI 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.