Correlation Between Harvest Fund and Lotus Health

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

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

Diversification Opportunities for Harvest Fund and Lotus Health

0.62

Correlation Coefficient

Harvest Fund  Lotus Health

Poor diversification

The 3 months correlation between Harvest and Lotus is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Harvest Fund Management 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 Harvest Fund 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 Harvest Fund Management 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 Harvest Fund i.e., Harvest Fund and Lotus Health go up and down completely randomly.

Pair Corralation between Harvest Fund and Lotus Health

Assuming the 90 days trading horizon Harvest Fund is expected to generate 1.48 times less return on investment than Lotus Health. But when comparing it to its historical volatility, Harvest Fund Management is 3.7 times less risky than Lotus Health. It trades about 0.31 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	Significant
Accuracy	100.0%
Values	Daily Returns

Harvest Fund Management  vs.  Lotus Health Group

Harvest Fund Management

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Fund Management are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Harvest Fund 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 Harvest Fund and Lotus Health

The main advantage of trading using opposite Harvest Fund and Lotus Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harvest Fund 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 Harvest Fund Management 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.

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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.