Correlation Between Applied Materials, and Lupatech

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

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

Diversification Opportunities for Applied Materials, and Lupatech

-0.75

Correlation Coefficient

Applied Materials,  Lupatech

Pay attention - limited upside

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

Pair Corralation between Applied Materials, and Lupatech

Assuming the 90 days trading horizon Applied Materials, is expected to generate 1.18 times more return on investment than Lupatech. However, Applied Materials, is 1.18 times more volatile than Lupatech SA. It trades about 0.15 of its potential returns per unit of risk. Lupatech SA is currently generating about -0.07 per unit of risk. If you would invest  8,463  in Applied Materials, on April 24, 2025 and sell it today you would earn a total of  1,976  from holding Applied Materials, or generate 23.35% return on investment over 90 days.

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

Applied Materials,  vs.  Lupatech SA

Applied Materials,

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials, are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Applied Materials, sustained solid returns over the last few months and may actually be approaching a breakup point.

Lupatech SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lupatech SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Applied Materials, and Lupatech

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

The idea behind Applied Materials, and Lupatech SA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.