Correlation Between Sapiens International and Lotus Technology
Can any of the company-specific risk be diversified away by investing in both Sapiens International and Lotus Technology 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 Sapiens International and Lotus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sapiens International and Lotus Technology Warrants, you can compare the effects of market volatilities on Sapiens International and Lotus Technology 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 Sapiens International with a short position of Lotus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sapiens International and Lotus Technology.
Diversification Opportunities for Sapiens International and Lotus Technology
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sapiens and Lotus is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sapiens International and Lotus Technology Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Technology Warrants and Sapiens International 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 Sapiens International are associated (or correlated) with Lotus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Technology Warrants has no effect on the direction of Sapiens International i.e., Sapiens International and Lotus Technology go up and down completely randomly.
Pair Corralation between Sapiens International and Lotus Technology
Given the investment horizon of 90 days Sapiens International is expected to under-perform the Lotus Technology. But the stock apears to be less risky and, when comparing its historical volatility, Sapiens International is 2.58 times less risky than Lotus Technology. The stock trades about -0.09 of its potential returns per unit of risk. The Lotus Technology Warrants is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 31.00 in Lotus Technology Warrants on September 3, 2024 and sell it today you would lose (3.00) from holding Lotus Technology Warrants or give up 9.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 60.94% |
| Values | Daily Returns |
Sapiens International vs. Lotus Technology Warrants
Performance |
| Timeline |
| Sapiens International |
| Lotus Technology Warrants |
Sapiens International and Lotus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sapiens International and Lotus Technology
The main advantage of trading using opposite Sapiens International and Lotus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sapiens International position performs unexpectedly, Lotus Technology 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 Technology will offset losses from the drop in Lotus Technology's long position.| Sapiens International vs. PROS Holdings | Sapiens International vs. Meridianlink | Sapiens International vs. Enfusion | Sapiens International vs. PDF Solutions |
| Lotus Technology vs. Aegean Airlines SA | Lotus Technology vs. Sapiens International | Lotus Technology vs. American Airlines Group | Lotus Technology vs. Pinterest |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |