Correlation Between Stellar and LUMENT FINANCE

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

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

Diversification Opportunities for Stellar and LUMENT FINANCE

-0.46

Correlation Coefficient

Stellar  LUMENT FINANCE

Very good diversification

The 3 months correlation between Stellar and LUMENT is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and LUMENT FINANCE TR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUMENT FINANCE TR and Stellar 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 Stellar are associated (or correlated) with LUMENT FINANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUMENT FINANCE TR has no effect on the direction of Stellar i.e., Stellar and LUMENT FINANCE go up and down completely randomly.

Pair Corralation between Stellar and LUMENT FINANCE

Assuming the 90 days trading horizon Stellar is expected to under-perform the LUMENT FINANCE. In addition to that, Stellar is 2.97 times more volatile than LUMENT FINANCE TR. It trades about -0.02 of its total potential returns per unit of risk. LUMENT FINANCE TR is currently generating about 0.03 per unit of volatility. If you would invest  244.00  in LUMENT FINANCE TR on December 20, 2024 and sell it today you would earn a total of  6.00  from holding LUMENT FINANCE TR or generate 2.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

Stellar  vs.  LUMENT FINANCE TR

Stellar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stellar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for Stellar shareholders.

LUMENT FINANCE TR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LUMENT FINANCE TR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, LUMENT FINANCE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Stellar and LUMENT FINANCE

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

The idea behind Stellar and LUMENT FINANCE TR 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 Stocks Directory module to find actively traded stocks across global markets.