Correlation Between LUNC and Morpho

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

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

Diversification Opportunities for LUNC and Morpho

0.54

Correlation Coefficient

LUNC  Morpho

Very weak diversification

The 3 months correlation between LUNC and Morpho is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding LUNC and Morpho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morpho and LUNC 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 LUNC are associated (or correlated) with Morpho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morpho has no effect on the direction of LUNC i.e., LUNC and Morpho go up and down completely randomly.

Pair Corralation between LUNC and Morpho

Assuming the 90 days trading horizon LUNC is expected to generate 7.01 times less return on investment than Morpho. But when comparing it to its historical volatility, LUNC is 2.11 times less risky than Morpho. It trades about 0.04 of its potential returns per unit of risk. Morpho is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  119.00  in Morpho on April 24, 2025 and sell it today you would earn a total of  83.00  from holding Morpho or generate 69.75% return on investment over 90 days.

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

LUNC  vs.  Morpho

LUNC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LUNC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, LUNC may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Morpho

Risk-Adjusted Performance

Good

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

Pair Trading with LUNC and Morpho

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

The idea behind LUNC and Morpho 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.