Correlation Between Melexis NV and Lotus Bakeries
Can any of the company-specific risk be diversified away by investing in both Melexis NV and Lotus Bakeries 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 Melexis NV and Lotus Bakeries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Melexis NV and Lotus Bakeries, you can compare the effects of market volatilities on Melexis NV and Lotus Bakeries 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 Melexis NV with a short position of Lotus Bakeries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melexis NV and Lotus Bakeries.
Diversification Opportunities for Melexis NV and Lotus Bakeries
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Melexis and Lotus is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Melexis NV and Lotus Bakeries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Bakeries and Melexis NV 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 Melexis NV are associated (or correlated) with Lotus Bakeries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Bakeries has no effect on the direction of Melexis NV i.e., Melexis NV and Lotus Bakeries go up and down completely randomly.
Pair Corralation between Melexis NV and Lotus Bakeries
Assuming the 90 days trading horizon Melexis NV is expected to under-perform the Lotus Bakeries. In addition to that, Melexis NV is 1.6 times more volatile than Lotus Bakeries. It trades about -0.04 of its total potential returns per unit of risk. Lotus Bakeries is currently generating about 0.04 per unit of volatility. If you would invest 912,773 in Lotus Bakeries on November 3, 2024 and sell it today you would earn a total of 117,227 from holding Lotus Bakeries or generate 12.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Melexis NV vs. Lotus Bakeries
Performance |
| Timeline |
| Melexis NV |
| Lotus Bakeries |
Melexis NV and Lotus Bakeries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Melexis NV and Lotus Bakeries
The main advantage of trading using opposite Melexis NV and Lotus Bakeries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Melexis NV position performs unexpectedly, Lotus Bakeries 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 Lotus Bakeries will offset losses from the drop in Lotus Bakeries' long position.| Melexis NV vs. Ackermans Van Haaren | Melexis NV vs. Sofina Socit Anonyme | Melexis NV vs. ageas SANV | Melexis NV vs. Barco NV |
| Lotus Bakeries vs. Sofina Socit Anonyme | Lotus Bakeries vs. Ackermans Van Haaren | Lotus Bakeries vs. Melexis NV | Lotus Bakeries vs. DIeteren Group SA |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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