Correlation Between PBG SA and Lupatech

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

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

Diversification Opportunities for PBG SA and Lupatech

-0.03

Correlation Coefficient

PBG SA  Lupatech

Good diversification

The 3 months correlation between PBG and Lupatech is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding PBG SA and Lupatech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupatech SA and PBG SA 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 PBG SA are associated (or correlated) with Lupatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupatech SA has no effect on the direction of PBG SA i.e., PBG SA and Lupatech go up and down completely randomly.

Pair Corralation between PBG SA and Lupatech

Assuming the 90 days trading horizon PBG SA is expected to generate 6.55 times less return on investment than Lupatech. In addition to that, PBG SA is 1.05 times more volatile than Lupatech SA. It trades about 0.01 of its total potential returns per unit of risk. Lupatech SA is currently generating about 0.07 per unit of volatility. If you would invest  118.00  in Lupatech SA on December 30, 2024 and sell it today you would earn a total of  13.00  from holding Lupatech SA or generate 11.02% return on investment over 90 days.

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

PBG SA  vs.  Lupatech SA

PBG SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days PBG SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PBG SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Lupatech SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lupatech SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lupatech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PBG SA and Lupatech

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

The idea behind PBG SA and Lupatech SA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.