Correlation Between LUX ISLAND and BEAU VALLON

Can any of the company-specific risk be diversified away by investing in both LUX ISLAND and BEAU VALLON 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 BEAU VALLON 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 BEAU VALLON HOSPITAL, you can compare the effects of market volatilities on LUX ISLAND and BEAU VALLON 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 BEAU VALLON. Check out your portfolio center. Please also check ongoing floating volatility patterns of LUX ISLAND and BEAU VALLON.

Diversification Opportunities for LUX ISLAND and BEAU VALLON

0.36

Correlation Coefficient

LUX ISLAND  BEAU VALLON

Weak diversification

The 3 months correlation between LUX and BEAU is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding LUX ISLAND RESORTS and BEAU VALLON HOSPITAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BEAU VALLON HOSPITAL 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 BEAU VALLON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BEAU VALLON HOSPITAL has no effect on the direction of LUX ISLAND i.e., LUX ISLAND and BEAU VALLON go up and down completely randomly.

Pair Corralation between LUX ISLAND and BEAU VALLON

Assuming the 90 days trading horizon LUX ISLAND is expected to generate 12.18 times less return on investment than BEAU VALLON. But when comparing it to its historical volatility, LUX ISLAND RESORTS is 2.3 times less risky than BEAU VALLON. It trades about 0.01 of its potential returns per unit of risk. BEAU VALLON HOSPITAL is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  260.00  in BEAU VALLON HOSPITAL on September 12, 2024 and sell it today you would earn a total of  39.00  from holding BEAU VALLON HOSPITAL or generate 15.0% return on investment over 90 days.

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

LUX ISLAND RESORTS  vs.  BEAU VALLON HOSPITAL

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.

BEAU VALLON HOSPITAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BEAU VALLON HOSPITAL 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.

Pair Trading with LUX ISLAND and BEAU VALLON

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

The idea behind LUX ISLAND RESORTS and BEAU VALLON HOSPITAL 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.