Correlation Between OHTL Public and LPN Development
Can any of the company-specific risk be diversified away by investing in both OHTL Public and LPN Development 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 OHTL Public and LPN Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OHTL Public and LPN Development Public, you can compare the effects of market volatilities on OHTL Public and LPN Development 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 OHTL Public with a short position of LPN Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of OHTL Public and LPN Development.
Diversification Opportunities for OHTL Public and LPN Development
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between OHTL and LPN is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding OHTL Public and LPN Development Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPN Development Public and OHTL Public 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 OHTL Public are associated (or correlated) with LPN Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPN Development Public has no effect on the direction of OHTL Public i.e., OHTL Public and LPN Development go up and down completely randomly.
Pair Corralation between OHTL Public and LPN Development
Assuming the 90 days trading horizon OHTL Public is expected to generate 1.0 times more return on investment than LPN Development. However, OHTL Public is 1.0 times more volatile than LPN Development Public. It trades about 0.06 of its potential returns per unit of risk. LPN Development Public is currently generating about 0.05 per unit of risk. If you would invest 46,000 in OHTL Public on November 3, 2024 and sell it today you would lose (14,600) from holding OHTL Public or give up 31.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OHTL Public vs. LPN Development Public
Performance |
| Timeline |
| OHTL Public |
| LPN Development Public |
OHTL Public and LPN Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OHTL Public and LPN Development
The main advantage of trading using opposite OHTL Public and LPN Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OHTL Public position performs unexpectedly, LPN Development 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 LPN Development will offset losses from the drop in LPN Development's long position.| OHTL Public vs. Laguna Resorts Hotels | OHTL Public vs. Nonthavej Hospital Public | OHTL Public vs. Ocean Glass Public | OHTL Public vs. Royal Orchid Hotel |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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