Correlation Between Superior Industries and Luminar Technologies

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

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

Diversification Opportunities for Superior Industries and Luminar Technologies

0.32

Correlation Coefficient

Superior Industries  Luminar Technologies

Weak diversification

The 3 months correlation between Superior and Luminar is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Superior Industries Internatio and Luminar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luminar Technologies and Superior 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 Superior Industries International are associated (or correlated) with Luminar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luminar Technologies has no effect on the direction of Superior Industries i.e., Superior Industries and Luminar Technologies go up and down completely randomly.

Pair Corralation between Superior Industries and Luminar Technologies

Considering the 90-day investment horizon Superior Industries is expected to generate 2.68 times less return on investment than Luminar Technologies. But when comparing it to its historical volatility, Superior Industries International is 2.07 times less risky than Luminar Technologies. It trades about 0.05 of its potential returns per unit of risk. Luminar Technologies is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  546.00  in Luminar Technologies on December 29, 2024 and sell it today you would earn a total of  56.00  from holding Luminar Technologies or generate 10.26% return on investment over 90 days.

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

Superior Industries Internatio  vs.  Luminar Technologies

Superior Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Superior Industries International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Superior Industries reported solid returns over the last few months and may actually be approaching a breakup point.

Luminar Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Luminar Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Luminar Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Superior Industries and Luminar Technologies

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

The idea behind Superior Industries International and Luminar Technologies 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.