Correlation Between Lupatech and Mills Estruturas

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

By analyzing existing cross correlation between Lupatech SA and Mills Estruturas e, you can compare the effects of market volatilities on Lupatech and Mills Estruturas 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 Mills Estruturas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lupatech and Mills Estruturas.

Diversification Opportunities for Lupatech and Mills Estruturas

0.9

Correlation Coefficient

Lupatech  Mills Estruturas

Almost no diversification

The 3 months correlation between Lupatech and Mills is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Lupatech SA and Mills Estruturas e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mills Estruturas e 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 Mills Estruturas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mills Estruturas e has no effect on the direction of Lupatech i.e., Lupatech and Mills Estruturas go up and down completely randomly.

Pair Corralation between Lupatech and Mills Estruturas

Assuming the 90 days trading horizon Lupatech SA is expected to generate 1.36 times more return on investment than Mills Estruturas. However, Lupatech is 1.36 times more volatile than Mills Estruturas e. It trades about -0.04 of its potential returns per unit of risk. Mills Estruturas e is currently generating about -0.12 per unit of risk. If you would invest  139.00  in Lupatech SA on October 20, 2024 and sell it today you would lose (14.00) from holding Lupatech SA or give up 10.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.33%
Values	Daily Returns

Lupatech SA  vs.  Mills Estruturas e

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.

Mills Estruturas e

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mills Estruturas e has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lupatech and Mills Estruturas

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

The idea behind Lupatech SA and Mills Estruturas e 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .