Correlation Between Lotes and GrandTech

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

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

Diversification Opportunities for Lotes and GrandTech

-0.42

Correlation Coefficient

Lotes  GrandTech

Very good diversification

The 3 months correlation between Lotes and GrandTech is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lotes Co and GrandTech CG Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrandTech CG Systems 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 GrandTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrandTech CG Systems has no effect on the direction of Lotes i.e., Lotes and GrandTech go up and down completely randomly.

Pair Corralation between Lotes and GrandTech

Assuming the 90 days trading horizon Lotes Co is expected to under-perform the GrandTech. In addition to that, Lotes is 2.24 times more volatile than GrandTech CG Systems. It trades about -0.11 of its total potential returns per unit of risk. GrandTech CG Systems is currently generating about -0.14 per unit of volatility. If you would invest  5,551  in GrandTech CG Systems on October 23, 2024 and sell it today you would lose (181.00) from holding GrandTech CG Systems or give up 3.26% of portfolio value over 90 days.

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

Lotes Co  vs.  GrandTech CG Systems

Lotes

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lotes Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lotes may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GrandTech CG Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GrandTech CG Systems 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 GrandTech

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

The idea behind Lotes Co and GrandTech CG Systems 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.