Correlation Between Lotus Pharmaceuticals and PayPal Holdings
Can any of the company-specific risk be diversified away by investing in both Lotus Pharmaceuticals and PayPal Holdings 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 PayPal Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotus Pharmaceuticals and PayPal Holdings, you can compare the effects of market volatilities on Lotus Pharmaceuticals and PayPal Holdings 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 PayPal Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotus Pharmaceuticals and PayPal Holdings.
Diversification Opportunities for Lotus Pharmaceuticals and PayPal Holdings
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lotus and PayPal is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Pharmaceuticals and PayPal Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayPal Holdings 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 PayPal Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PayPal Holdings has no effect on the direction of Lotus Pharmaceuticals i.e., Lotus Pharmaceuticals and PayPal Holdings go up and down completely randomly.
Pair Corralation between Lotus Pharmaceuticals and PayPal Holdings
Given the investment horizon of 90 days Lotus Pharmaceuticals is expected to generate 19.41 times more return on investment than PayPal Holdings. However, Lotus Pharmaceuticals is 19.41 times more volatile than PayPal Holdings. It trades about 0.07 of its potential returns per unit of risk. PayPal Holdings is currently generating about 0.01 per unit of risk. If you would invest 1.00 in Lotus Pharmaceuticals on November 28, 2024 and sell it today you would lose (0.60) from holding Lotus Pharmaceuticals or give up 60.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Lotus Pharmaceuticals vs. PayPal Holdings
Performance |
| Timeline |
| Lotus Pharmaceuticals |
| PayPal Holdings |
Lotus Pharmaceuticals and PayPal Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotus Pharmaceuticals and PayPal Holdings
The main advantage of trading using opposite Lotus Pharmaceuticals and PayPal Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotus Pharmaceuticals position performs unexpectedly, PayPal Holdings 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 PayPal Holdings will offset losses from the drop in PayPal Holdings' long position.| Lotus Pharmaceuticals vs. China Teletech Holding | Lotus Pharmaceuticals vs. Allied Energy | Lotus Pharmaceuticals vs. Alpha Star Acquisition | Lotus Pharmaceuticals vs. Trimax Corp |
| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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