Correlation Between Lumia and MAANSHAN IRON

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

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

Diversification Opportunities for Lumia and MAANSHAN IRON

0.59

Correlation Coefficient

Lumia  MAANSHAN IRON

Very weak diversification

The 3 months correlation between Lumia and MAANSHAN is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and MAANSHAN IRON H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAANSHAN IRON H 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 MAANSHAN IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAANSHAN IRON H has no effect on the direction of Lumia i.e., Lumia and MAANSHAN IRON go up and down completely randomly.

Pair Corralation between Lumia and MAANSHAN IRON

Assuming the 90 days trading horizon Lumia is expected to under-perform the MAANSHAN IRON. In addition to that, Lumia is 1.08 times more volatile than MAANSHAN IRON H . It trades about -0.25 of its total potential returns per unit of risk. MAANSHAN IRON H is currently generating about 0.25 per unit of volatility. If you would invest  17.00  in MAANSHAN IRON H on October 26, 2024 and sell it today you would earn a total of  4.00  from holding MAANSHAN IRON H or generate 23.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.71%
Values	Daily Returns

Lumia  vs.  MAANSHAN IRON H

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.

MAANSHAN IRON H

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MAANSHAN IRON H are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, MAANSHAN IRON unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lumia and MAANSHAN IRON

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

The idea behind Lumia and MAANSHAN IRON H 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.