Correlation Between LUX ISLAND and PLASTIC INDUSTRY

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

By analyzing existing cross correlation between LUX ISLAND RESORTS and PLASTIC INDUSTRY LTD, you can compare the effects of market volatilities on LUX ISLAND and PLASTIC INDUSTRY 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 LUX ISLAND with a short position of PLASTIC INDUSTRY. Check out your portfolio center. Please also check ongoing floating volatility patterns of LUX ISLAND and PLASTIC INDUSTRY.

Diversification Opportunities for LUX ISLAND and PLASTIC INDUSTRY

-0.75

Correlation Coefficient

LUX ISLAND  PLASTIC INDUSTRY

Pay attention - limited upside

The 3 months correlation between LUX and PLASTIC is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding LUX ISLAND RESORTS and PLASTIC INDUSTRY LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLASTIC INDUSTRY LTD and LUX ISLAND 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 LUX ISLAND RESORTS are associated (or correlated) with PLASTIC INDUSTRY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLASTIC INDUSTRY LTD has no effect on the direction of LUX ISLAND i.e., LUX ISLAND and PLASTIC INDUSTRY go up and down completely randomly.

Pair Corralation between LUX ISLAND and PLASTIC INDUSTRY

Assuming the 90 days trading horizon LUX ISLAND RESORTS is expected to under-perform the PLASTIC INDUSTRY. But the stock apears to be less risky and, when comparing its historical volatility, LUX ISLAND RESORTS is 1.25 times less risky than PLASTIC INDUSTRY. The stock trades about -0.1 of its potential returns per unit of risk. The PLASTIC INDUSTRY LTD is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,700  in PLASTIC INDUSTRY LTD on September 17, 2024 and sell it today you would earn a total of  725.00  from holding PLASTIC INDUSTRY LTD or generate 19.59% return on investment over 90 days.

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

LUX ISLAND RESORTS  vs.  PLASTIC INDUSTRY LTD

LUX ISLAND RESORTS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LUX ISLAND RESORTS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

PLASTIC INDUSTRY LTD

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PLASTIC INDUSTRY LTD are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, PLASTIC INDUSTRY displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LUX ISLAND and PLASTIC INDUSTRY

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

The idea behind LUX ISLAND RESORTS and PLASTIC INDUSTRY LTD 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.