Correlation Between Lupatech and Trade Desk

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

By analyzing existing cross correlation between Lupatech SA and The Trade Desk, you can compare the effects of market volatilities on Lupatech and Trade Desk 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 Trade Desk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lupatech and Trade Desk.

Diversification Opportunities for Lupatech and Trade Desk

-0.61

Correlation Coefficient

Lupatech  Trade Desk

Excellent diversification

The 3 months correlation between Lupatech and Trade is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lupatech SA and The Trade Desk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Desk 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 Trade Desk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Desk has no effect on the direction of Lupatech i.e., Lupatech and Trade Desk go up and down completely randomly.

Pair Corralation between Lupatech and Trade Desk

Assuming the 90 days trading horizon Lupatech SA is expected to under-perform the Trade Desk. In addition to that, Lupatech is 1.16 times more volatile than The Trade Desk. It trades about -0.07 of its total potential returns per unit of risk. The Trade Desk is currently generating about 0.17 per unit of volatility. If you would invest  596.00  in The Trade Desk on September 24, 2024 and sell it today you would earn a total of  164.00  from holding The Trade Desk or generate 27.52% return on investment over 90 days.

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

Lupatech SA  vs.  The Trade Desk

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Trade Desk

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Trade Desk are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Trade Desk sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lupatech and Trade Desk

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

The idea behind Lupatech SA and The Trade Desk 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.