Correlation Between Superior Industries and Lotus Technology
Can any of the company-specific risk be diversified away by investing in both Superior Industries 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 Superior Industries and Lotus Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Industries International and Lotus Technology American, you can compare the effects of market volatilities on Superior Industries 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 Superior Industries with a short position of Lotus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Industries and Lotus Technology.
Diversification Opportunities for Superior Industries and Lotus Technology
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Superior and Lotus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Superior Industries Internatio and Lotus Technology American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Technology American and Superior Industries 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 Superior Industries 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 American has no effect on the direction of Superior Industries i.e., Superior Industries and Lotus Technology go up and down completely randomly.
Pair Corralation between Superior Industries and Lotus Technology
Considering the 90-day investment horizon Superior Industries International is expected to generate 0.81 times more return on investment than Lotus Technology. However, Superior Industries International is 1.23 times less risky than Lotus Technology. It trades about -0.02 of its potential returns per unit of risk. Lotus Technology American is currently generating about -0.02 per unit of risk. If you would invest 451.00 in Superior Industries International on August 27, 2024 and sell it today you would lose (213.00) from holding Superior Industries International or give up 47.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Industries Internatio vs. Lotus Technology American
Performance |
| Timeline |
| Superior Industries |
| Lotus Technology American |
Superior Industries and Lotus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Industries and Lotus Technology
The main advantage of trading using opposite Superior Industries and Lotus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Industries 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.| Superior Industries vs. Monro Muffler Brake | Superior Industries vs. Dorman Products | Superior Industries vs. Motorcar Parts of | Superior Industries vs. Gentherm |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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