Correlation Between Lotes and Mosel Vitelic

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

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

Diversification Opportunities for Lotes and Mosel Vitelic

0.61

Correlation Coefficient

Lotes  Mosel Vitelic

Poor diversification

The 3 months correlation between Lotes and Mosel is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lotes Co and Mosel Vitelic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mosel Vitelic and Lotes 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 Lotes Co are associated (or correlated) with Mosel Vitelic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mosel Vitelic has no effect on the direction of Lotes i.e., Lotes and Mosel Vitelic go up and down completely randomly.

Pair Corralation between Lotes and Mosel Vitelic

Assuming the 90 days trading horizon Lotes Co is expected to generate 1.54 times more return on investment than Mosel Vitelic. However, Lotes is 1.54 times more volatile than Mosel Vitelic. It trades about 0.2 of its potential returns per unit of risk. Mosel Vitelic is currently generating about 0.05 per unit of risk. If you would invest  135,500  in Lotes Co on September 15, 2024 and sell it today you would earn a total of  57,500  from holding Lotes Co or generate 42.44% return on investment over 90 days.

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

Lotes Co  vs.  Mosel Vitelic

Lotes

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lotes Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lotes showed solid returns over the last few months and may actually be approaching a breakup point.

Mosel Vitelic

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mosel Vitelic are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Mosel Vitelic is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Lotes and Mosel Vitelic

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

The idea behind Lotes Co and Mosel Vitelic 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.