Correlation Between Bluzelle and LUKSO

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

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

Diversification Opportunities for Bluzelle and LUKSO

0.4

Correlation Coefficient

Bluzelle  LUKSO

Very weak diversification

The 3 months correlation between Bluzelle and LUKSO is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bluzelle and LUKSO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LUKSO and Bluzelle 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 Bluzelle are associated (or correlated) with LUKSO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LUKSO has no effect on the direction of Bluzelle i.e., Bluzelle and LUKSO go up and down completely randomly.

Pair Corralation between Bluzelle and LUKSO

Assuming the 90 days trading horizon Bluzelle is expected to under-perform the LUKSO. But the crypto coin apears to be less risky and, when comparing its historical volatility, Bluzelle is 5.26 times less risky than LUKSO. The crypto coin trades about -0.1 of its potential returns per unit of risk. The LUKSO is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,107  in LUKSO on January 25, 2024 and sell it today you would lose (114.00) from holding LUKSO or give up 10.3% of portfolio value over 90 days.

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

Bluzelle  vs.  LUKSO

Bluzelle

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bluzelle are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Bluzelle exhibited solid returns over the last few months and may actually be approaching a breakup point.

LUKSO

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LUKSO are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, LUKSO exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bluzelle and LUKSO

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

The idea behind Bluzelle and LUKSO 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.