Correlation Between Lupatech and FDO INV

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

By analyzing existing cross correlation between Lupatech SA and FDO INV IMOB, you can compare the effects of market volatilities on Lupatech and FDO INV 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 Lupatech with a short position of FDO INV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lupatech and FDO INV.

Diversification Opportunities for Lupatech and FDO INV

-0.19

Correlation Coefficient

Lupatech  FDO INV

Good diversification

The 3 months correlation between Lupatech and FDO is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Lupatech SA and FDO INV IMOB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDO INV IMOB and Lupatech 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 Lupatech SA are associated (or correlated) with FDO INV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDO INV IMOB has no effect on the direction of Lupatech i.e., Lupatech and FDO INV go up and down completely randomly.

Pair Corralation between Lupatech and FDO INV

Assuming the 90 days trading horizon Lupatech SA is expected to under-perform the FDO INV. In addition to that, Lupatech is 1.78 times more volatile than FDO INV IMOB. It trades about -0.04 of its total potential returns per unit of risk. FDO INV IMOB is currently generating about 0.06 per unit of volatility. If you would invest  138,282  in FDO INV IMOB on September 13, 2024 and sell it today you would earn a total of  6,718  from holding FDO INV IMOB or generate 4.86% return on investment over 90 days.

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

Lupatech SA  vs.  FDO INV IMOB

Lupatech SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lupatech SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

FDO INV IMOB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FDO INV IMOB are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, FDO INV is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lupatech and FDO INV

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

The idea behind Lupatech SA and FDO INV IMOB 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.