Correlation Between Lmp Automotive and Albertsons Companies

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Can any of the company-specific risk be diversified away by investing in both Lmp Automotive and Albertsons Companies 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 Lmp Automotive and Albertsons Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lmp Automotive Holdings and Albertsons Companies, you can compare the effects of market volatilities on Lmp Automotive and Albertsons Companies 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 Lmp Automotive with a short position of Albertsons Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lmp Automotive and Albertsons Companies.

Diversification Opportunities for Lmp Automotive and Albertsons Companies

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between Lmp Automotive and Albertsons is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lmp Automotive Holdings and Albertsons Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albertsons Companies and Lmp Automotive 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 Lmp Automotive Holdings are associated (or correlated) with Albertsons Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albertsons Companies has no effect on the direction of Lmp Automotive i.e., Lmp Automotive and Albertsons Companies go up and down completely randomly.

Pair Corralation between Lmp Automotive and Albertsons Companies

Given the investment horizon of 90 days Lmp Automotive Holdings is expected to under-perform the Albertsons Companies. In addition to that, Lmp Automotive is 1.58 times more volatile than Albertsons Companies. It trades about -0.26 of its total potential returns per unit of risk. Albertsons Companies is currently generating about 0.04 per unit of volatility. If you would invest  2,085  in Albertsons Companies on September 6, 2022 and sell it today you would earn a total of  11.00  from holding Albertsons Companies or generate 0.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Lmp Automotive Holdings  vs.  Albertsons Companies

 Performance (%) 
       Timeline  
Lmp Automotive Holdings 
Lmp Automotive Performance
0 of 100
Over the last 90 days Lmp Automotive Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Lmp Automotive is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Lmp Automotive Price Channel

Albertsons Companies 
Albertsons Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Albertsons Companies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Albertsons Companies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Albertsons Price Channel

Lmp Automotive and Albertsons Companies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lmp Automotive and Albertsons Companies

The main advantage of trading using opposite Lmp Automotive and Albertsons Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lmp Automotive position performs unexpectedly, Albertsons Companies 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 Albertsons Companies will offset losses from the drop in Albertsons Companies' long position.
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The idea behind Lmp Automotive Holdings and Albertsons Companies 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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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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