Correlation Between Lotus Resources and Salazar Resources
Can any of the company-specific risk be diversified away by investing in both Lotus Resources and Salazar Resources 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 Salazar Resources 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 Salazar Resources Limited, you can compare the effects of market volatilities on Lotus Resources and Salazar Resources 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 Salazar Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotus Resources and Salazar Resources.
Diversification Opportunities for Lotus Resources and Salazar Resources
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lotus and Salazar is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Resources Limited and Salazar Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salazar Resources 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 Salazar Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salazar Resources has no effect on the direction of Lotus Resources i.e., Lotus Resources and Salazar Resources go up and down completely randomly.
Pair Corralation between Lotus Resources and Salazar Resources
Assuming the 90 days horizon Lotus Resources is expected to generate 2.51 times less return on investment than Salazar Resources. But when comparing it to its historical volatility, Lotus Resources Limited is 1.84 times less risky than Salazar Resources. It trades about 0.03 of its potential returns per unit of risk. Salazar Resources Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Salazar Resources Limited on August 29, 2024 and sell it today you would lose (0.36) from holding Salazar Resources Limited or give up 6.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotus Resources Limited vs. Salazar Resources Limited
Performance |
| Timeline |
| Lotus Resources |
| Salazar Resources |
Lotus Resources and Salazar Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotus Resources and Salazar Resources
The main advantage of trading using opposite Lotus Resources and Salazar Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotus Resources position performs unexpectedly, Salazar Resources 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 Salazar Resources will offset losses from the drop in Salazar Resources' long position.The idea behind Lotus Resources Limited and Salazar Resources Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |