Correlation Between Lumia and INTEL

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

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

Diversification Opportunities for Lumia and INTEL

-0.2

Correlation Coefficient

Lumia  INTEL

Good diversification

The 3 months correlation between Lumia and INTEL is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and INTEL PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTEL PORATION 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 INTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTEL PORATION has no effect on the direction of Lumia i.e., Lumia and INTEL go up and down completely randomly.

Pair Corralation between Lumia and INTEL

Assuming the 90 days trading horizon Lumia is expected to under-perform the INTEL. But the crypto coin apears to be less risky and, when comparing its historical volatility, Lumia is 1.14 times less risky than INTEL. The crypto coin trades about -0.32 of its potential returns per unit of risk. The INTEL PORATION is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7,808  in INTEL PORATION on October 25, 2024 and sell it today you would earn a total of  1,214  from holding INTEL PORATION or generate 15.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lumia  vs.  INTEL PORATION

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.

INTEL PORATION

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INTEL PORATION are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, INTEL sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lumia and INTEL

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

The idea behind Lumia and INTEL PORATION 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.