Correlation Between Luxfer Holdings and Logility Supply

Can any of the company-specific risk be diversified away by investing in both Luxfer Holdings and Logility Supply 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 Logility Supply 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 Logility Supply Chain, you can compare the effects of market volatilities on Luxfer Holdings and Logility Supply 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 Logility Supply. Check out your portfolio center. Please also check ongoing floating volatility patterns of Luxfer Holdings and Logility Supply.

Diversification Opportunities for Luxfer Holdings and Logility Supply

0.39

Correlation Coefficient

Luxfer Holdings  Logility Supply

Weak diversification

The 3 months correlation between Luxfer and Logility is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Luxfer Holdings PLC and Logility Supply Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logility Supply Chain 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 Logility Supply. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logility Supply Chain has no effect on the direction of Luxfer Holdings i.e., Luxfer Holdings and Logility Supply go up and down completely randomly.

Pair Corralation between Luxfer Holdings and Logility Supply

Given the investment horizon of 90 days Luxfer Holdings is expected to generate 1.7 times less return on investment than Logility Supply. But when comparing it to its historical volatility, Luxfer Holdings PLC is 1.05 times less risky than Logility Supply. It trades about 0.04 of its potential returns per unit of risk. Logility Supply Chain is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,027  in Logility Supply Chain on October 8, 2024 and sell it today you would earn a total of  77.00  from holding Logility Supply Chain or generate 7.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Luxfer Holdings PLC  vs.  Logility Supply Chain

Luxfer Holdings PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Luxfer Holdings PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Luxfer Holdings is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Logility Supply Chain

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Logility Supply Chain are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Logility Supply may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Luxfer Holdings and Logility Supply

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

The idea behind Luxfer Holdings PLC and Logility Supply Chain 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.