Correlation Between Lsb Industries and Black Swan

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

By analyzing existing cross correlation between Lsb Industries and Black Swan Graphene, you can compare the effects of market volatilities on Lsb Industries and Black Swan 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 Lsb Industries with a short position of Black Swan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lsb Industries and Black Swan.

Diversification Opportunities for Lsb Industries and Black Swan

-0.25

Correlation Coefficient

Lsb Industries  Black Swan

Very good diversification

The 3 months correlation between Lsb and Black is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Lsb Industries and Black Swan Graphene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Swan Graphene and Lsb Industries 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 Lsb Industries are associated (or correlated) with Black Swan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Swan Graphene has no effect on the direction of Lsb Industries i.e., Lsb Industries and Black Swan go up and down completely randomly.

Pair Corralation between Lsb Industries and Black Swan

Considering the 90-day investment horizon Lsb Industries is expected to generate 0.46 times more return on investment than Black Swan. However, Lsb Industries is 2.17 times less risky than Black Swan. It trades about 0.0 of its potential returns per unit of risk. Black Swan Graphene is currently generating about -0.01 per unit of risk. If you would invest  789.00  in Lsb Industries on September 24, 2024 and sell it today you would lose (21.00) from holding Lsb Industries or give up 2.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Lsb Industries  vs.  Black Swan Graphene

Lsb Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lsb Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lsb Industries is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Black Swan Graphene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Swan Graphene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Black Swan is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lsb Industries and Black Swan

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

The idea behind Lsb Industries and Black Swan Graphene 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.