Correlation Between Stem Holdings and Lotus Ventures
Can any of the company-specific risk be diversified away by investing in both Stem Holdings and Lotus Ventures 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 Stem Holdings and Lotus Ventures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stem Holdings and Lotus Ventures, you can compare the effects of market volatilities on Stem Holdings and Lotus Ventures 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 Stem Holdings with a short position of Lotus Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stem Holdings and Lotus Ventures.
Diversification Opportunities for Stem Holdings and Lotus Ventures
-1.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Stem and Lotus is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding Stem Holdings and Lotus Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Ventures and Stem Holdings 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 Stem Holdings are associated (or correlated) with Lotus Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Ventures has no effect on the direction of Stem Holdings i.e., Stem Holdings and Lotus Ventures go up and down completely randomly.
Pair Corralation between Stem Holdings and Lotus Ventures
Given the investment horizon of 90 days Stem Holdings is expected to generate 2.53 times more return on investment than Lotus Ventures. However, Stem Holdings is 2.53 times more volatile than Lotus Ventures. It trades about 0.08 of its potential returns per unit of risk. Lotus Ventures is currently generating about 0.05 per unit of risk. If you would invest 1.20 in Stem Holdings on August 26, 2024 and sell it today you would lose (0.20) from holding Stem Holdings or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Strong |
| Accuracy | 79.88% |
| Values | Daily Returns |
Stem Holdings vs. Lotus Ventures
Performance |
| Timeline |
| Stem Holdings |
| Lotus Ventures |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Stem Holdings and Lotus Ventures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stem Holdings and Lotus Ventures
The main advantage of trading using opposite Stem Holdings and Lotus Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stem Holdings position performs unexpectedly, Lotus Ventures 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 Ventures will offset losses from the drop in Lotus Ventures' long position.| Stem Holdings vs. Orchid Ventures | Stem Holdings vs. TransCanna Holdings | Stem Holdings vs. BioQuest Corp | Stem Holdings vs. Item 9 Labs |
| Lotus Ventures vs. Benchmark Botanics | Lotus Ventures vs. Speakeasy Cannabis Club | Lotus Ventures vs. City View Green | Lotus Ventures vs. BC Craft Supply |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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