Correlation Between Kingsway Financial and Lotus Technology
Can any of the company-specific risk be diversified away by investing in both Kingsway Financial and Lotus Technology 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 Kingsway Financial and Lotus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kingsway Financial Services and Lotus Technology Warrants, you can compare the effects of market volatilities on Kingsway Financial and Lotus Technology 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 Kingsway Financial with a short position of Lotus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingsway Financial and Lotus Technology.
Diversification Opportunities for Kingsway Financial and Lotus Technology
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kingsway and Lotus is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kingsway Financial Services and Lotus Technology Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Technology Warrants and Kingsway Financial 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 Kingsway Financial Services are associated (or correlated) with Lotus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Technology Warrants has no effect on the direction of Kingsway Financial i.e., Kingsway Financial and Lotus Technology go up and down completely randomly.
Pair Corralation between Kingsway Financial and Lotus Technology
Considering the 90-day investment horizon Kingsway Financial Services is expected to under-perform the Lotus Technology. But the stock apears to be less risky and, when comparing its historical volatility, Kingsway Financial Services is 4.55 times less risky than Lotus Technology. The stock trades about -0.08 of its potential returns per unit of risk. The Lotus Technology Warrants is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Lotus Technology Warrants on August 28, 2024 and sell it today you would earn a total of 1.00 from holding Lotus Technology Warrants or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 61.9% |
| Values | Daily Returns |
Kingsway Financial Services vs. Lotus Technology Warrants
Performance |
| Timeline |
| Kingsway Financial |
| Lotus Technology Warrants |
Kingsway Financial and Lotus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kingsway Financial and Lotus Technology
The main advantage of trading using opposite Kingsway Financial and Lotus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kingsway Financial position performs unexpectedly, Lotus Technology 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 Technology will offset losses from the drop in Lotus Technology's long position.| Kingsway Financial vs. CarGurus | Kingsway Financial vs. KAR Auction Services | Kingsway Financial vs. Driven Brands Holdings | Kingsway Financial vs. Group 1 Automotive |
| Lotus Technology vs. F PD | Lotus Technology vs. China Yuchai International | Lotus Technology vs. Canoo Holdings |
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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