Correlation Between Lotus Pharmaceuticals and China Teletech
Can any of the company-specific risk be diversified away by investing in both Lotus Pharmaceuticals and China Teletech 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 Pharmaceuticals and China Teletech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotus Pharmaceuticals and China Teletech Holding, you can compare the effects of market volatilities on Lotus Pharmaceuticals and China Teletech 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 Pharmaceuticals with a short position of China Teletech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotus Pharmaceuticals and China Teletech.
Diversification Opportunities for Lotus Pharmaceuticals and China Teletech
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lotus and China is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Pharmaceuticals and China Teletech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Teletech Holding and Lotus Pharmaceuticals 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 Pharmaceuticals are associated (or correlated) with China Teletech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Teletech Holding has no effect on the direction of Lotus Pharmaceuticals i.e., Lotus Pharmaceuticals and China Teletech go up and down completely randomly.
Pair Corralation between Lotus Pharmaceuticals and China Teletech
Given the investment horizon of 90 days Lotus Pharmaceuticals is expected to under-perform the China Teletech. But the pink sheet apears to be less risky and, when comparing its historical volatility, Lotus Pharmaceuticals is 2.27 times less risky than China Teletech. The pink sheet trades about -0.21 of its potential returns per unit of risk. The China Teletech Holding is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.22 in China Teletech Holding on September 2, 2024 and sell it today you would lose (0.13) from holding China Teletech Holding or give up 59.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotus Pharmaceuticals vs. China Teletech Holding
Performance |
| Timeline |
| Lotus Pharmaceuticals |
| China Teletech Holding |
Lotus Pharmaceuticals and China Teletech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotus Pharmaceuticals and China Teletech
The main advantage of trading using opposite Lotus Pharmaceuticals and China Teletech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotus Pharmaceuticals position performs unexpectedly, China Teletech 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 China Teletech will offset losses from the drop in China Teletech's long position.| Lotus Pharmaceuticals vs. China Teletech Holding | Lotus Pharmaceuticals vs. Allied Energy | Lotus Pharmaceuticals vs. Alpha Star Acquisition | Lotus Pharmaceuticals vs. Trimax Corp |
| China Teletech vs. American Leisure Holdings | China Teletech vs. Supurva Healthcare Group | China Teletech vs. China Health Management | China Teletech vs. Embrace Change Acquisition |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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