Correlation Between Lotes and TA I

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

By analyzing existing cross correlation between Lotes Co and TA I Technology Co, you can compare the effects of market volatilities on Lotes and TA I 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 TA I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotes and TA I.

Diversification Opportunities for Lotes and TA I

-0.74

Correlation Coefficient

Lotes  TA I

Pay attention - limited upside

The 3 months correlation between Lotes and 2478 is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Lotes Co and TA I Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TA I Technology 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 TA I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TA I Technology has no effect on the direction of Lotes i.e., Lotes and TA I go up and down completely randomly.

Pair Corralation between Lotes and TA I

Assuming the 90 days trading horizon Lotes Co is expected to generate 2.21 times more return on investment than TA I. However, Lotes is 2.21 times more volatile than TA I Technology Co. It trades about 0.26 of its potential returns per unit of risk. TA I Technology Co is currently generating about 0.01 per unit of risk. If you would invest  164,500  in Lotes Co on September 16, 2024 and sell it today you would earn a total of  28,500  from holding Lotes Co or generate 17.33% return on investment over 90 days.

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

Lotes Co  vs.  TA I Technology Co

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.

TA I Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TA I Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Lotes and TA I

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

The idea behind Lotes Co and TA I Technology Co 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.