Correlation Between Lotus Pharmaceutical and Handa Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Lotus Pharmaceutical and Handa Pharmaceuticals 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 Lotus Pharmaceutical and Handa Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotus Pharmaceutical Co and Handa Pharmaceuticals, you can compare the effects of market volatilities on Lotus Pharmaceutical and Handa Pharmaceuticals 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 Lotus Pharmaceutical with a short position of Handa Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotus Pharmaceutical and Handa Pharmaceuticals.
Diversification Opportunities for Lotus Pharmaceutical and Handa Pharmaceuticals
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lotus and Handa is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Pharmaceutical Co and Handa Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Handa Pharmaceuticals and Lotus Pharmaceutical 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 Lotus Pharmaceutical Co are associated (or correlated) with Handa Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Handa Pharmaceuticals has no effect on the direction of Lotus Pharmaceutical i.e., Lotus Pharmaceutical and Handa Pharmaceuticals go up and down completely randomly.
Pair Corralation between Lotus Pharmaceutical and Handa Pharmaceuticals
Assuming the 90 days trading horizon Lotus Pharmaceutical Co is expected to generate 0.83 times more return on investment than Handa Pharmaceuticals. However, Lotus Pharmaceutical Co is 1.21 times less risky than Handa Pharmaceuticals. It trades about 0.02 of its potential returns per unit of risk. Handa Pharmaceuticals is currently generating about -0.02 per unit of risk. If you would invest 26,950 in Lotus Pharmaceutical Co on August 26, 2024 and sell it today you would earn a total of 1,200 from holding Lotus Pharmaceutical Co or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Lotus Pharmaceutical Co vs. Handa Pharmaceuticals
Performance |
| Timeline |
| Lotus Pharmaceutical |
| Handa Pharmaceuticals |
Lotus Pharmaceutical and Handa Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotus Pharmaceutical and Handa Pharmaceuticals
The main advantage of trading using opposite Lotus Pharmaceutical and Handa Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotus Pharmaceutical position performs unexpectedly, Handa Pharmaceuticals 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 Handa Pharmaceuticals will offset losses from the drop in Handa Pharmaceuticals' long position.| Lotus Pharmaceutical vs. Chung Hsin Electric Machinery | Lotus Pharmaceutical vs. Nan Ya Printed | Lotus Pharmaceutical vs. Panion BF Biotech | Lotus Pharmaceutical vs. Adimmune Corp |
| Handa Pharmaceuticals vs. Lotus Pharmaceutical Co | Handa Pharmaceuticals vs. Center Laboratories | Handa Pharmaceuticals vs. Synmosa Biopharma | Handa Pharmaceuticals vs. GeneFerm Biotechnology Co |
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 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.
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