Correlation Between DIeteren Group and Lotus Bakeries
Can any of the company-specific risk be diversified away by investing in both DIeteren Group and Lotus Bakeries 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 DIeteren Group and Lotus Bakeries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DIeteren Group SA and Lotus Bakeries, you can compare the effects of market volatilities on DIeteren Group and Lotus Bakeries 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 DIeteren Group with a short position of Lotus Bakeries. Check out your portfolio center. Please also check ongoing floating volatility patterns of DIeteren Group and Lotus Bakeries.
Diversification Opportunities for DIeteren Group and Lotus Bakeries
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between DIeteren and Lotus is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding DIeteren Group SA and Lotus Bakeries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Bakeries and DIeteren Group 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 DIeteren Group SA are associated (or correlated) with Lotus Bakeries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Bakeries has no effect on the direction of DIeteren Group i.e., DIeteren Group and Lotus Bakeries go up and down completely randomly.
Pair Corralation between DIeteren Group and Lotus Bakeries
Assuming the 90 days trading horizon DIeteren Group SA is expected to generate 1.71 times more return on investment than Lotus Bakeries. However, DIeteren Group is 1.71 times more volatile than Lotus Bakeries. It trades about 0.08 of its potential returns per unit of risk. Lotus Bakeries is currently generating about 0.04 per unit of risk. If you would invest 11,096 in DIeteren Group SA on November 3, 2024 and sell it today you would earn a total of 5,144 from holding DIeteren Group SA or generate 46.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
DIeteren Group SA vs. Lotus Bakeries
Performance |
| Timeline |
| DIeteren Group SA |
| Lotus Bakeries |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
DIeteren Group and Lotus Bakeries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DIeteren Group and Lotus Bakeries
The main advantage of trading using opposite DIeteren Group and Lotus Bakeries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DIeteren Group position performs unexpectedly, Lotus Bakeries 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 Lotus Bakeries will offset losses from the drop in Lotus Bakeries' long position.| DIeteren Group vs. Ackermans Van Haaren | DIeteren Group vs. Sofina Socit Anonyme | DIeteren Group vs. Groep Brussel Lambert | DIeteren Group vs. Barco NV |
| Lotus Bakeries vs. Sofina Socit Anonyme | Lotus Bakeries vs. Ackermans Van Haaren | Lotus Bakeries vs. Melexis NV | Lotus Bakeries vs. DIeteren Group SA |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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