Correlation Between Lotus Technology and Compania Cervecerias
Can any of the company-specific risk be diversified away by investing in both Lotus Technology and Compania Cervecerias 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 Technology and Compania Cervecerias into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotus Technology American and Compania Cervecerias Unidas, you can compare the effects of market volatilities on Lotus Technology and Compania Cervecerias 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 Technology with a short position of Compania Cervecerias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotus Technology and Compania Cervecerias.
Diversification Opportunities for Lotus Technology and Compania Cervecerias
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lotus and Compania is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Technology American and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias and Lotus Technology 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 Technology American are associated (or correlated) with Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of Lotus Technology i.e., Lotus Technology and Compania Cervecerias go up and down completely randomly.
Pair Corralation between Lotus Technology and Compania Cervecerias
Considering the 90-day investment horizon Lotus Technology American is expected to under-perform the Compania Cervecerias. In addition to that, Lotus Technology is 1.85 times more volatile than Compania Cervecerias Unidas. It trades about -0.1 of its total potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about 0.05 per unit of volatility. If you would invest 1,123 in Compania Cervecerias Unidas on September 4, 2024 and sell it today you would earn a total of 13.00 from holding Compania Cervecerias Unidas or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotus Technology American vs. Compania Cervecerias Unidas
Performance |
| Timeline |
| Lotus Technology American |
| Compania Cervecerias |
Lotus Technology and Compania Cervecerias Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotus Technology and Compania Cervecerias
The main advantage of trading using opposite Lotus Technology and Compania Cervecerias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotus Technology position performs unexpectedly, Compania Cervecerias 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 Compania Cervecerias will offset losses from the drop in Compania Cervecerias' long position.| Lotus Technology vs. Tesla Inc | Lotus Technology vs. Nio Class A | Lotus Technology vs. Xpeng Inc | Lotus Technology vs. Lucid Group |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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