Correlation Between Emerita Resources and Lotus Resources
Can any of the company-specific risk be diversified away by investing in both Emerita Resources and Lotus Resources 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 Emerita Resources and Lotus Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerita Resources Corp and Lotus Resources Limited, you can compare the effects of market volatilities on Emerita Resources and Lotus Resources 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 Emerita Resources with a short position of Lotus Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerita Resources and Lotus Resources.
Diversification Opportunities for Emerita Resources and Lotus Resources
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Emerita and Lotus is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Emerita Resources Corp and Lotus Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Resources and Emerita Resources 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 Emerita Resources Corp are associated (or correlated) with Lotus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Resources has no effect on the direction of Emerita Resources i.e., Emerita Resources and Lotus Resources go up and down completely randomly.
Pair Corralation between Emerita Resources and Lotus Resources
Assuming the 90 days horizon Emerita Resources is expected to generate 2.79 times less return on investment than Lotus Resources. But when comparing it to its historical volatility, Emerita Resources Corp is 1.63 times less risky than Lotus Resources. It trades about 0.03 of its potential returns per unit of risk. Lotus Resources Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Lotus Resources Limited on September 3, 2024 and sell it today you would earn a total of 1.00 from holding Lotus Resources Limited or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerita Resources Corp vs. Lotus Resources Limited
Performance |
| Timeline |
| Emerita Resources Corp |
| Lotus Resources |
Emerita Resources and Lotus Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerita Resources and Lotus Resources
The main advantage of trading using opposite Emerita Resources and Lotus Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerita Resources position performs unexpectedly, Lotus Resources 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 Resources will offset losses from the drop in Lotus Resources' long position.| Emerita Resources vs. Nobel Resources Corp | Emerita Resources vs. Juggernaut Exploration | Emerita Resources vs. SPC Nickel Corp | Emerita Resources vs. Lotus Resources Limited |
| Lotus Resources vs. Filo Mining Corp | Lotus Resources vs. Golden Goliath Resources | Lotus Resources vs. Stria Lithium | Lotus Resources vs. Monitor Ventures |
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 Stocks Directory module to find actively traded stocks across global markets.
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