Correlation Between Everjoy Health and Lotus Health

Can any of the company-specific risk be diversified away by investing in both Everjoy Health and Lotus Health 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 Everjoy Health and Lotus Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Everjoy Health Group and Lotus Health Group, you can compare the effects of market volatilities on Everjoy Health and Lotus Health 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 Everjoy Health with a short position of Lotus Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everjoy Health and Lotus Health.

Diversification Opportunities for Everjoy Health and Lotus Health

0.46

Correlation Coefficient

Everjoy Health  Lotus Health

Very weak diversification

The 3 months correlation between Everjoy and Lotus is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Everjoy Health Group and Lotus Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Health Group and Everjoy Health 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 Everjoy Health Group are associated (or correlated) with Lotus Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Health Group has no effect on the direction of Everjoy Health i.e., Everjoy Health and Lotus Health go up and down completely randomly.

Pair Corralation between Everjoy Health and Lotus Health

Assuming the 90 days trading horizon Everjoy Health is expected to generate 1.36 times less return on investment than Lotus Health. But when comparing it to its historical volatility, Everjoy Health Group is 1.2 times less risky than Lotus Health. It trades about 0.11 of its potential returns per unit of risk. Lotus Health Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  474.00  in Lotus Health Group on December 25, 2024 and sell it today you would earn a total of  158.00  from holding Lotus Health Group or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Everjoy Health Group  vs.  Lotus Health Group

Everjoy Health Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Everjoy Health Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Everjoy Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Lotus Health Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lotus Health Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lotus Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Everjoy Health and Lotus Health

The main advantage of trading using opposite Everjoy Health and Lotus Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everjoy Health position performs unexpectedly, Lotus Health 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 Health will offset losses from the drop in Lotus Health's long position.

The idea behind Everjoy Health Group and Lotus Health Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.