Correlation Between Lotus Technology and Volcon
Can any of the company-specific risk be diversified away by investing in both Lotus Technology and Volcon 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 Volcon 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 Volcon Inc, you can compare the effects of market volatilities on Lotus Technology and Volcon 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 Volcon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotus Technology and Volcon.
Diversification Opportunities for Lotus Technology and Volcon
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lotus and Volcon is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Technology American and Volcon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volcon Inc 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 Volcon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volcon Inc has no effect on the direction of Lotus Technology i.e., Lotus Technology and Volcon go up and down completely randomly.
Pair Corralation between Lotus Technology and Volcon
Considering the 90-day investment horizon Lotus Technology American is expected to generate 0.63 times more return on investment than Volcon. However, Lotus Technology American is 1.58 times less risky than Volcon. It trades about -0.15 of its potential returns per unit of risk. Volcon Inc is currently generating about -0.11 per unit of risk. If you would invest 499.00 in Lotus Technology American on October 31, 2024 and sell it today you would lose (215.00) from holding Lotus Technology American or give up 43.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotus Technology American vs. Volcon Inc
Performance |
| Timeline |
| Lotus Technology American |
| Volcon Inc |
Lotus Technology and Volcon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotus Technology and Volcon
The main advantage of trading using opposite Lotus Technology and Volcon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotus Technology position performs unexpectedly, Volcon 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 Volcon will offset losses from the drop in Volcon's long position.| Lotus Technology vs. Snap On | Lotus Technology vs. Hochschild Mining PLC | Lotus Technology vs. Allied Gaming Entertainment | Lotus Technology vs. Virgin Group Acquisition |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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