Correlation Between Lotus Resources and Elcora Advanced
Can any of the company-specific risk be diversified away by investing in both Lotus Resources and Elcora Advanced 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 Elcora Advanced 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 Elcora Advanced Materials, you can compare the effects of market volatilities on Lotus Resources and Elcora Advanced 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 Elcora Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotus Resources and Elcora Advanced.
Diversification Opportunities for Lotus Resources and Elcora Advanced
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lotus and Elcora is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Resources Limited and Elcora Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elcora Advanced Materials 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 Elcora Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elcora Advanced Materials has no effect on the direction of Lotus Resources i.e., Lotus Resources and Elcora Advanced go up and down completely randomly.
Pair Corralation between Lotus Resources and Elcora Advanced
Assuming the 90 days horizon Lotus Resources Limited is expected to under-perform the Elcora Advanced. But the otc stock apears to be less risky and, when comparing its historical volatility, Lotus Resources Limited is 2.62 times less risky than Elcora Advanced. The otc stock trades about -0.07 of its potential returns per unit of risk. The Elcora Advanced Materials is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1.46 in Elcora Advanced Materials on August 31, 2024 and sell it today you would lose (0.26) from holding Elcora Advanced Materials or give up 17.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotus Resources Limited vs. Elcora Advanced Materials
Performance |
| Timeline |
| Lotus Resources |
| Elcora Advanced Materials |
Lotus Resources and Elcora Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotus Resources and Elcora Advanced
The main advantage of trading using opposite Lotus Resources and Elcora Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotus Resources position performs unexpectedly, Elcora Advanced 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 Elcora Advanced will offset losses from the drop in Elcora Advanced'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 |
| Elcora Advanced vs. South32 Limited | Elcora Advanced vs. NioCorp Developments Ltd | Elcora Advanced vs. HUMANA INC | Elcora Advanced 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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