Correlation Between Lotes and Apacer Technology

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

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

Diversification Opportunities for Lotes and Apacer Technology

-0.46

Correlation Coefficient

Lotes  Apacer Technology

Very good diversification

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

Pair Corralation between Lotes and Apacer Technology

Assuming the 90 days trading horizon Lotes Co is expected to under-perform the Apacer Technology. In addition to that, Lotes is 1.84 times more volatile than Apacer Technology. It trades about -0.15 of its total potential returns per unit of risk. Apacer Technology is currently generating about -0.03 per unit of volatility. If you would invest  4,460  in Apacer Technology on October 20, 2024 and sell it today you would lose (45.00) from holding Apacer Technology or give up 1.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Lotes Co  vs.  Apacer Technology

Lotes

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lotes Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Lotes is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Apacer Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apacer Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Lotes and Apacer Technology

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

The idea behind Lotes Co and Apacer Technology 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.