Correlation Between Lumen Technologies and AST SpaceMobile

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

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

Diversification Opportunities for Lumen Technologies and AST SpaceMobile

0.45

Correlation Coefficient

Lumen Technologies  AST SpaceMobile

Very weak diversification

The 3 months correlation between Lumen and AST is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lumen Technologies and AST SpaceMobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AST SpaceMobile and Lumen Technologies 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 Lumen Technologies are associated (or correlated) with AST SpaceMobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AST SpaceMobile has no effect on the direction of Lumen Technologies i.e., Lumen Technologies and AST SpaceMobile go up and down completely randomly.

Pair Corralation between Lumen Technologies and AST SpaceMobile

Given the investment horizon of 90 days Lumen Technologies is expected to generate 0.47 times more return on investment than AST SpaceMobile. However, Lumen Technologies is 2.13 times less risky than AST SpaceMobile. It trades about 0.1 of its potential returns per unit of risk. AST SpaceMobile is currently generating about -0.2 per unit of risk. If you would invest  538.00  in Lumen Technologies on September 4, 2024 and sell it today you would earn a total of  136.00  from holding Lumen Technologies or generate 25.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	29.69%
Values	Daily Returns

Lumen Technologies  vs.  AST SpaceMobile

Lumen Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lumen Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Lumen Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

AST SpaceMobile

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AST SpaceMobile has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Lumen Technologies and AST SpaceMobile

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

The idea behind Lumen Technologies and AST SpaceMobile 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.