Correlation Between Lotus Resources and American CuMo
Can any of the company-specific risk be diversified away by investing in both Lotus Resources and American CuMo 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 American CuMo 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 American CuMo Mining, you can compare the effects of market volatilities on Lotus Resources and American CuMo 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 American CuMo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotus Resources and American CuMo.
Diversification Opportunities for Lotus Resources and American CuMo
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lotus and American is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Resources Limited and American CuMo Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American CuMo Mining 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 American CuMo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American CuMo Mining has no effect on the direction of Lotus Resources i.e., Lotus Resources and American CuMo go up and down completely randomly.
Pair Corralation between Lotus Resources and American CuMo
Assuming the 90 days horizon Lotus Resources Limited is expected to under-perform the American CuMo. But the otc stock apears to be less risky and, when comparing its historical volatility, Lotus Resources Limited is 3.58 times less risky than American CuMo. The otc stock trades about -0.06 of its potential returns per unit of risk. The American CuMo Mining is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1.00 in American CuMo Mining on September 12, 2024 and sell it today you would earn a total of 0.00 from holding American CuMo Mining or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotus Resources Limited vs. American CuMo Mining
Performance |
| Timeline |
| Lotus Resources |
| American CuMo Mining |
Lotus Resources and American CuMo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotus Resources and American CuMo
The main advantage of trading using opposite Lotus Resources and American CuMo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotus Resources position performs unexpectedly, American CuMo 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 American CuMo will offset losses from the drop in American CuMo's long position.| Lotus Resources vs. Qubec Nickel Corp | Lotus Resources vs. IGO Limited | Lotus Resources vs. Focus Graphite | Lotus Resources vs. Mineral Res |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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