Correlation Between Lupatech and Clave Indices

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

By analyzing existing cross correlation between Lupatech SA and Clave Indices De, you can compare the effects of market volatilities on Lupatech and Clave Indices 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 Lupatech with a short position of Clave Indices. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lupatech and Clave Indices.

Diversification Opportunities for Lupatech and Clave Indices

0.37

Correlation Coefficient

Lupatech  Clave Indices

Weak diversification

The 3 months correlation between Lupatech and Clave is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lupatech SA and Clave Indices De in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clave Indices De and Lupatech 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 Lupatech SA are associated (or correlated) with Clave Indices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clave Indices De has no effect on the direction of Lupatech i.e., Lupatech and Clave Indices go up and down completely randomly.

Pair Corralation between Lupatech and Clave Indices

Assuming the 90 days trading horizon Lupatech SA is expected to under-perform the Clave Indices. In addition to that, Lupatech is 3.23 times more volatile than Clave Indices De. It trades about -0.08 of its total potential returns per unit of risk. Clave Indices De is currently generating about -0.09 per unit of volatility. If you would invest  9,265  in Clave Indices De on August 31, 2024 and sell it today you would lose (460.00) from holding Clave Indices De or give up 4.96% of portfolio value over 90 days.

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

Lupatech SA  vs.  Clave Indices De

Lupatech SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lupatech SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Clave Indices De

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clave Indices De has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Clave Indices is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lupatech and Clave Indices

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

The idea behind Lupatech SA and Clave Indices De 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..