Correlation Between Deluxe and Lava Medtech

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

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

Diversification Opportunities for Deluxe and Lava Medtech

-0.09

Correlation Coefficient

Deluxe  Lava Medtech

Good diversification

The 3 months correlation between Deluxe and Lava is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Deluxe and Lava Medtech Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lava Medtech Acquisition and Deluxe 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 Deluxe are associated (or correlated) with Lava Medtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lava Medtech Acquisition has no effect on the direction of Deluxe i.e., Deluxe and Lava Medtech go up and down completely randomly.

Pair Corralation between Deluxe and Lava Medtech

If you would invest  2,291  in Deluxe on September 16, 2024 and sell it today you would earn a total of  41.00  from holding Deluxe or generate 1.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Deluxe  vs.  Lava Medtech Acquisition

Deluxe

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deluxe are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Deluxe showed solid returns over the last few months and may actually be approaching a breakup point.

Lava Medtech Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Deluxe and Lava Medtech

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

The idea behind Deluxe and Lava Medtech Acquisition 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.