Correlation Between Lotus Health and Changchun BCHT

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

Diversification Opportunities for Lotus Health and Changchun BCHT

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between Lotus and Changchun is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Health Group and Changchun BCHT Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changchun BCHT Biote and Lotus Health 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 Health Group are associated (or correlated) with Changchun BCHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changchun BCHT Biote has no effect on the direction of Lotus Health i.e., Lotus Health and Changchun BCHT go up and down completely randomly.

Pair Corralation between Lotus Health and Changchun BCHT

Assuming the 90 days trading horizon Lotus Health Group is expected to generate 1.13 times more return on investment than Changchun BCHT. However, Lotus Health is 1.13 times more volatile than Changchun BCHT Biotechnology. It trades about 0.11 of its potential returns per unit of risk. Changchun BCHT Biotechnology is currently generating about -0.05 per unit of risk. If you would invest  328.00  in Lotus Health Group on November 3, 2024 and sell it today you would earn a total of  175.00  from holding Lotus Health Group or generate 53.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Lotus Health Group  vs.  Changchun BCHT Biotechnology

 Performance 
       Timeline  
Lotus Health Group 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Lotus Health Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lotus Health sustained solid returns over the last few months and may actually be approaching a breakup point.
Changchun BCHT Biote 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Changchun BCHT Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lotus Health and Changchun BCHT Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lotus Health and Changchun BCHT

The main advantage of trading using opposite Lotus Health and Changchun BCHT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotus Health position performs unexpectedly, Changchun BCHT 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 Changchun BCHT will offset losses from the drop in Changchun BCHT's long position.
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The idea behind Lotus Health Group and Changchun BCHT Biotechnology 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 Stocks Directory module to find actively traded stocks across global markets.

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