Correlation Between Lsb Industries and NanoXplore

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

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

Diversification Opportunities for Lsb Industries and NanoXplore

0.35

Correlation Coefficient

Lsb Industries  NanoXplore

Weak diversification

The 3 months correlation between Lsb and NanoXplore is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lsb Industries and NanoXplore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NanoXplore and Lsb Industries 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 Lsb Industries are associated (or correlated) with NanoXplore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NanoXplore has no effect on the direction of Lsb Industries i.e., Lsb Industries and NanoXplore go up and down completely randomly.

Pair Corralation between Lsb Industries and NanoXplore

Considering the 90-day investment horizon Lsb Industries is expected to under-perform the NanoXplore. In addition to that, Lsb Industries is 1.83 times more volatile than NanoXplore. It trades about -0.04 of its total potential returns per unit of risk. NanoXplore is currently generating about -0.01 per unit of volatility. If you would invest  169.00  in NanoXplore on December 29, 2024 and sell it today you would lose (5.00) from holding NanoXplore or give up 2.96% of portfolio value over 90 days.

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

Lsb Industries  vs.  NanoXplore

Lsb Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lsb Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady 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.

NanoXplore

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Lsb Industries and NanoXplore

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

The idea behind Lsb Industries and NanoXplore 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.