Correlation Between Lyxor 1 and Asahi Group

Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and Asahi Group 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 Lyxor 1 and Asahi Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lyxor 1 and Asahi Group Holdings, you can compare the effects of market volatilities on Lyxor 1 and Asahi Group 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 Lyxor 1 with a short position of Asahi Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and Asahi Group.

Diversification Opportunities for Lyxor 1 and Asahi Group

-0.51

Correlation Coefficient

Lyxor 1  Asahi Group

Excellent diversification

The 3 months correlation between Lyxor and Asahi is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and Asahi Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asahi Group Holdings and Lyxor 1 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 Lyxor 1 are associated (or correlated) with Asahi Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asahi Group Holdings has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and Asahi Group go up and down completely randomly.

Pair Corralation between Lyxor 1 and Asahi Group

Assuming the 90 days trading horizon Lyxor 1 is expected to generate 0.49 times more return on investment than Asahi Group. However, Lyxor 1 is 2.03 times less risky than Asahi Group. It trades about 0.03 of its potential returns per unit of risk. Asahi Group Holdings is currently generating about -0.01 per unit of risk. If you would invest  2,445  in Lyxor 1 on September 13, 2024 and sell it today you would earn a total of  141.00  from holding Lyxor 1 or generate 5.77% return on investment over 90 days.

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

Lyxor 1   vs.  Asahi Group Holdings

Lyxor 1

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 1 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Lyxor 1 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Asahi Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asahi Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Lyxor 1 and Asahi Group

The main advantage of trading using opposite Lyxor 1 and Asahi Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, Asahi Group 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 Asahi Group will offset losses from the drop in Asahi Group's long position.

The idea behind Lyxor 1 and Asahi Group Holdings 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.