Correlation Between Lotus Health and Dook Media

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

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

Diversification Opportunities for Lotus Health and Dook Media

0.92

Correlation Coefficient

Lotus Health  Dook Media

Almost no diversification

The 3 months correlation between Lotus and Dook is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Health Group and Dook Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dook Media Group and Lotus Health 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 Lotus Health Group are associated (or correlated) with Dook Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dook Media Group has no effect on the direction of Lotus Health i.e., Lotus Health and Dook Media go up and down completely randomly.

Pair Corralation between Lotus Health and Dook Media

Assuming the 90 days trading horizon Lotus Health Group is expected to generate 0.83 times more return on investment than Dook Media. However, Lotus Health Group is 1.2 times less risky than Dook Media. It trades about 0.34 of its potential returns per unit of risk. Dook Media Group is currently generating about 0.19 per unit of risk. If you would invest  299.00  in Lotus Health Group on September 14, 2024 and sell it today you would earn a total of  286.00  from holding Lotus Health Group or generate 95.65% return on investment over 90 days.

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

Lotus Health Group  vs.  Dook Media Group

Lotus Health Group

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Lotus Health Group are ranked lower than 26 (%) 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.

Dook Media Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dook Media Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dook Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lotus Health and Dook Media

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

The idea behind Lotus Health Group and Dook Media 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.