Correlation Between Transgene and Luxfer Holdings

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

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

Diversification Opportunities for Transgene and Luxfer Holdings

0.0

Correlation Coefficient

Transgene  Luxfer Holdings

Pay attention - limited upside

The 3 months correlation between Transgene and Luxfer is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Transgene SA 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 Transgene 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 Transgene SA 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 Transgene i.e., Transgene and Luxfer Holdings go up and down completely randomly.

Pair Corralation between Transgene and Luxfer Holdings

If you would invest  1,076  in Luxfer Holdings PLC on September 4, 2024 and sell it today you would earn a total of  404.00  from holding Luxfer Holdings PLC or generate 37.55% return on investment over 90 days.

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

Transgene SA  vs.  Luxfer Holdings PLC

Transgene SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Luxfer Holdings PLC

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Luxfer Holdings PLC are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal technical and fundamental indicators, Luxfer Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Transgene and Luxfer Holdings

The main advantage of trading using opposite Transgene and Luxfer Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transgene 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 Transgene SA 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.