Correlation Between Shanghai CEO and Lotus Health

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

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

Diversification Opportunities for Shanghai CEO and Lotus Health

0.49

Correlation Coefficient

Shanghai CEO  Lotus Health

Very weak diversification

The 3 months correlation between Shanghai and Lotus is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai CEO Environmental 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 Shanghai CEO 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 Shanghai CEO Environmental 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 Shanghai CEO i.e., Shanghai CEO and Lotus Health go up and down completely randomly.

Pair Corralation between Shanghai CEO and Lotus Health

Assuming the 90 days trading horizon Shanghai CEO is expected to generate 3.25 times less return on investment than Lotus Health. But when comparing it to its historical volatility, Shanghai CEO Environmental is 2.68 times less risky than Lotus Health. It trades about 0.1 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	Weak
Accuracy	100.0%
Values	Daily Returns

Shanghai CEO Environmental  vs.  Lotus Health Group

Shanghai CEO Environ

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shanghai CEO Environmental are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shanghai CEO may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Shanghai CEO and Lotus Health

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

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.