Correlation Between TOYO Co, and Luxfer Holdings

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

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

Diversification Opportunities for TOYO Co, and Luxfer Holdings

0.36

Correlation Coefficient

TOYO Co,  Luxfer Holdings

Weak diversification

The 3 months correlation between TOYO and Luxfer is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding TOYO Co, Ltd and Luxfer Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luxfer Holdings PLC and TOYO Co, 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 TOYO Co, Ltd are associated (or correlated) with Luxfer Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luxfer Holdings PLC has no effect on the direction of TOYO Co, i.e., TOYO Co, and Luxfer Holdings go up and down completely randomly.

Pair Corralation between TOYO Co, and Luxfer Holdings

Given the investment horizon of 90 days TOYO Co, Ltd is expected to generate 5.22 times more return on investment than Luxfer Holdings. However, TOYO Co, is 5.22 times more volatile than Luxfer Holdings PLC. It trades about 0.02 of its potential returns per unit of risk. Luxfer Holdings PLC is currently generating about 0.08 per unit of risk. If you would invest  870.00  in TOYO Co, Ltd on September 17, 2024 and sell it today you would lose (514.00) from holding TOYO Co, Ltd or give up 59.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	41.24%
Values	Daily Returns

TOYO Co, Ltd  vs.  Luxfer Holdings PLC

TOYO Co,

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TOYO Co, Ltd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, TOYO Co, displayed solid returns over the last few months and may actually be approaching a breakup point.

Luxfer Holdings PLC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Luxfer Holdings PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Luxfer Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TOYO Co, and Luxfer Holdings

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

The idea behind TOYO Co, Ltd and Luxfer Holdings PLC 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.