Correlation Between LICOGI 13 and Industrial Urban

Can any of the company-specific risk be diversified away by investing in both LICOGI 13 and Industrial Urban 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 LICOGI 13 and Industrial Urban into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LICOGI 13 and Industrial Urban Development, you can compare the effects of market volatilities on LICOGI 13 and Industrial Urban 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 LICOGI 13 with a short position of Industrial Urban. Check out your portfolio center. Please also check ongoing floating volatility patterns of LICOGI 13 and Industrial Urban.

Diversification Opportunities for LICOGI 13 and Industrial Urban

0.8

Correlation Coefficient

LICOGI 13  Industrial Urban

Very poor diversification

The 3 months correlation between LICOGI and Industrial is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding LICOGI 13 and Industrial Urban Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Urban Dev and LICOGI 13 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 LICOGI 13 are associated (or correlated) with Industrial Urban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Urban Dev has no effect on the direction of LICOGI 13 i.e., LICOGI 13 and Industrial Urban go up and down completely randomly.

Pair Corralation between LICOGI 13 and Industrial Urban

Assuming the 90 days trading horizon LICOGI 13 is expected to generate 0.83 times more return on investment than Industrial Urban. However, LICOGI 13 is 1.2 times less risky than Industrial Urban. It trades about -0.03 of its potential returns per unit of risk. Industrial Urban Development is currently generating about -0.22 per unit of risk. If you would invest  320,000  in LICOGI 13 on September 29, 2024 and sell it today you would lose (20,000) from holding LICOGI 13 or give up 6.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.48%
Values	Daily Returns

LICOGI 13  vs.  Industrial Urban Development

LICOGI 13

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LICOGI 13 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, LICOGI 13 is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Industrial Urban Dev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industrial Urban Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with LICOGI 13 and Industrial Urban

The main advantage of trading using opposite LICOGI 13 and Industrial Urban positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LICOGI 13 position performs unexpectedly, Industrial Urban 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 Industrial Urban will offset losses from the drop in Industrial Urban's long position.

The idea behind LICOGI 13 and Industrial Urban Development 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.