Correlation Between Lotus Resources and Wallbridge Mining
Can any of the company-specific risk be diversified away by investing in both Lotus Resources and Wallbridge Mining 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 Wallbridge Mining 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 Wallbridge Mining, you can compare the effects of market volatilities on Lotus Resources and Wallbridge Mining 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 Wallbridge Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotus Resources and Wallbridge Mining.
Diversification Opportunities for Lotus Resources and Wallbridge Mining
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotus and Wallbridge is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Resources Limited and Wallbridge Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wallbridge 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 Wallbridge Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wallbridge Mining has no effect on the direction of Lotus Resources i.e., Lotus Resources and Wallbridge Mining go up and down completely randomly.
Pair Corralation between Lotus Resources and Wallbridge Mining
Assuming the 90 days horizon Lotus Resources Limited is expected to generate 1.55 times more return on investment than Wallbridge Mining. However, Lotus Resources is 1.55 times more volatile than Wallbridge Mining. It trades about -0.06 of its potential returns per unit of risk. Wallbridge Mining is currently generating about -0.15 per unit of risk. If you would invest 16.00 in Lotus Resources Limited on September 12, 2024 and sell it today you would lose (2.00) from holding Lotus Resources Limited or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lotus Resources Limited vs. Wallbridge Mining
Performance |
| Timeline |
| Lotus Resources |
| Wallbridge Mining |
Lotus Resources and Wallbridge Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotus Resources and Wallbridge Mining
The main advantage of trading using opposite Lotus Resources and Wallbridge Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotus Resources position performs unexpectedly, Wallbridge Mining 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 Wallbridge Mining will offset losses from the drop in Wallbridge Mining's long position.| Lotus Resources vs. Qubec Nickel Corp | Lotus Resources vs. IGO Limited | Lotus Resources vs. Focus Graphite | Lotus Resources vs. Mineral Res |
| Wallbridge Mining vs. Group Ten Metals | Wallbridge Mining vs. Ascendant Resources | Wallbridge Mining vs. Atico Mining | Wallbridge Mining vs. Prime Mining Corp |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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