Correlation Between Lotus Resources and Gensource Potash
Can any of the company-specific risk be diversified away by investing in both Lotus Resources and Gensource Potash 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 Resources and Gensource Potash into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotus Resources Limited and Gensource Potash, you can compare the effects of market volatilities on Lotus Resources and Gensource Potash 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 Resources with a short position of Gensource Potash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotus Resources and Gensource Potash.
Diversification Opportunities for Lotus Resources and Gensource Potash
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lotus and Gensource is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Resources Limited and Gensource Potash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gensource Potash and Lotus 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 Lotus Resources Limited are associated (or correlated) with Gensource Potash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gensource Potash has no effect on the direction of Lotus Resources i.e., Lotus Resources and Gensource Potash go up and down completely randomly.
Pair Corralation between Lotus Resources and Gensource Potash
Assuming the 90 days horizon Lotus Resources Limited is expected to under-perform the Gensource Potash. But the otc stock apears to be less risky and, when comparing its historical volatility, Lotus Resources Limited is 8.41 times less risky than Gensource Potash. The otc stock trades about -0.02 of its potential returns per unit of risk. The Gensource Potash is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Gensource Potash on September 1, 2024 and sell it today you would lose (2.00) from holding Gensource Potash or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotus Resources Limited vs. Gensource Potash
Performance |
| Timeline |
| Lotus Resources |
| Gensource Potash |
Lotus Resources and Gensource Potash Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotus Resources and Gensource Potash
The main advantage of trading using opposite Lotus Resources and Gensource Potash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotus Resources position performs unexpectedly, Gensource Potash 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 Gensource Potash will offset losses from the drop in Gensource Potash's long position.| Lotus Resources vs. Filo Mining Corp | Lotus Resources vs. Golden Goliath Resources | Lotus Resources vs. Stria Lithium | Lotus Resources vs. Monitor Ventures |
| Gensource Potash vs. South32 Limited | Gensource Potash vs. NioCorp Developments Ltd | Gensource Potash vs. HUMANA INC | Gensource Potash vs. SCOR PK |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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