Correlation Between Lotus Bakeries and Greenyard
Can any of the company-specific risk be diversified away by investing in both Lotus Bakeries and Greenyard 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 Bakeries and Greenyard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotus Bakeries and Greenyard NV, you can compare the effects of market volatilities on Lotus Bakeries and Greenyard 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 Bakeries with a short position of Greenyard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotus Bakeries and Greenyard.
Diversification Opportunities for Lotus Bakeries and Greenyard
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lotus and Greenyard is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Bakeries and Greenyard NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenyard NV and Lotus Bakeries 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 Bakeries are associated (or correlated) with Greenyard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenyard NV has no effect on the direction of Lotus Bakeries i.e., Lotus Bakeries and Greenyard go up and down completely randomly.
Pair Corralation between Lotus Bakeries and Greenyard
Assuming the 90 days trading horizon Lotus Bakeries is expected to generate 0.82 times more return on investment than Greenyard. However, Lotus Bakeries is 1.22 times less risky than Greenyard. It trades about -0.24 of its potential returns per unit of risk. Greenyard NV is currently generating about -0.39 per unit of risk. If you would invest 1,194,000 in Lotus Bakeries on September 14, 2024 and sell it today you would lose (104,000) from holding Lotus Bakeries or give up 8.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotus Bakeries vs. Greenyard NV
Performance |
| Timeline |
| Lotus Bakeries |
| Greenyard NV |
Lotus Bakeries and Greenyard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotus Bakeries and Greenyard
The main advantage of trading using opposite Lotus Bakeries and Greenyard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotus Bakeries position performs unexpectedly, Greenyard 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 Greenyard will offset losses from the drop in Greenyard's long position.| Lotus Bakeries vs. Sofina Socit Anonyme | Lotus Bakeries vs. Ackermans Van Haaren | Lotus Bakeries vs. Melexis NV | Lotus Bakeries vs. DIeteren Group SA |
| Greenyard vs. Ontex Group NV | Greenyard vs. Exmar NV | Greenyard vs. Melexis NV | Greenyard vs. Biocartis Group NV |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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