Correlation Between Luxfer Holdings and CP ALL

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

By analyzing existing cross correlation between Luxfer Holdings PLC and CP ALL Public, you can compare the effects of market volatilities on Luxfer Holdings and CP ALL 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 Luxfer Holdings with a short position of CP ALL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and CP ALL.

Diversification Opportunities for Luxfer Holdings and CP ALL

0.75

Correlation Coefficient

Luxfer Holdings  CP ALL

Poor diversification

The 3 months correlation between Luxfer and CVPBF is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and CP ALL Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CP ALL Public and Luxfer Holdings 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 Luxfer Holdings PLC are associated (or correlated) with CP ALL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CP ALL Public has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and CP ALL go up and down completely randomly.

Pair Corralation between Luxfer Holdings and CP ALL

Given the investment horizon of 90 days Luxfer Holdings PLC is expected to under-perform the CP ALL. But the stock apears to be less risky and, when comparing its historical volatility, Luxfer Holdings PLC is 1.69 times less risky than CP ALL. The stock trades about -0.06 of its potential returns per unit of risk. The CP ALL Public is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  180.00  in CP ALL Public on December 20, 2024 and sell it today you would lose (15.00) from holding CP ALL Public or give up 8.33% of portfolio value over 90 days.

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

Luxfer Holdings PLC  vs.  CP ALL Public

Luxfer Holdings PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Luxfer Holdings PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

CP ALL Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days CP ALL Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, CP ALL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Luxfer Holdings and CP ALL

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

The idea behind Luxfer Holdings PLC and CP ALL Public 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.