Correlation Between Salazar Resources and Lotus Resources
Can any of the company-specific risk be diversified away by investing in both Salazar Resources and Lotus Resources 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 Salazar Resources and Lotus Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salazar Resources Limited and Lotus Resources Limited, you can compare the effects of market volatilities on Salazar Resources and Lotus Resources 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 Salazar Resources with a short position of Lotus Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salazar Resources and Lotus Resources.
Diversification Opportunities for Salazar Resources and Lotus Resources
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Salazar and Lotus is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Salazar Resources Limited and Lotus Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Resources and Salazar Resources 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 Salazar Resources Limited are associated (or correlated) with Lotus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Resources has no effect on the direction of Salazar Resources i.e., Salazar Resources and Lotus Resources go up and down completely randomly.
Pair Corralation between Salazar Resources and Lotus Resources
Assuming the 90 days horizon Salazar Resources Limited is expected to generate 1.72 times more return on investment than Lotus Resources. However, Salazar Resources is 1.72 times more volatile than Lotus Resources Limited. It trades about 0.03 of its potential returns per unit of risk. Lotus Resources Limited is currently generating about 0.03 per unit of risk. If you would invest 10.00 in Salazar Resources Limited on November 2, 2024 and sell it today you would lose (3.75) from holding Salazar Resources Limited or give up 37.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salazar Resources Limited vs. Lotus Resources Limited
Performance |
| Timeline |
| Salazar Resources |
| Lotus Resources |
Salazar Resources and Lotus Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salazar Resources and Lotus Resources
The main advantage of trading using opposite Salazar Resources and Lotus Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salazar Resources position performs unexpectedly, Lotus Resources 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 Resources will offset losses from the drop in Lotus Resources' long position.| Salazar Resources vs. Gensource Potash | Salazar Resources vs. Troilus Gold Corp | Salazar Resources vs. Avarone Metals | Salazar Resources vs. Aurelia Metals Limited |
| Lotus Resources vs. Hannan Metals | Lotus Resources vs. Atco Mining | Lotus Resources vs. Leading Edge Materials | Lotus Resources vs. Arianne Phosphate |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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