Correlation Between Arrow Greentech and Lotus Eye

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

By analyzing existing cross correlation between Arrow Greentech Limited and Lotus Eye Hospital, you can compare the effects of market volatilities on Arrow Greentech and Lotus Eye 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 Arrow Greentech with a short position of Lotus Eye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Greentech and Lotus Eye.

Diversification Opportunities for Arrow Greentech and Lotus Eye

-0.36

Correlation Coefficient

Arrow Greentech  Lotus Eye

Very good diversification

The 3 months correlation between Arrow and Lotus is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Greentech Limited and Lotus Eye Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Eye Hospital and Arrow Greentech 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 Arrow Greentech Limited are associated (or correlated) with Lotus Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Eye Hospital has no effect on the direction of Arrow Greentech i.e., Arrow Greentech and Lotus Eye go up and down completely randomly.

Pair Corralation between Arrow Greentech and Lotus Eye

Assuming the 90 days trading horizon Arrow Greentech Limited is expected to under-perform the Lotus Eye. In addition to that, Arrow Greentech is 1.15 times more volatile than Lotus Eye Hospital. It trades about -0.12 of its total potential returns per unit of risk. Lotus Eye Hospital is currently generating about 0.03 per unit of volatility. If you would invest  6,709  in Lotus Eye Hospital on September 23, 2024 and sell it today you would earn a total of  75.00  from holding Lotus Eye Hospital or generate 1.12% return on investment over 90 days.

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

Arrow Greentech Limited  vs.  Lotus Eye Hospital

Arrow Greentech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arrow Greentech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Arrow Greentech is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Lotus Eye Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lotus Eye Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Arrow Greentech and Lotus Eye

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

The idea behind Arrow Greentech Limited and Lotus Eye Hospital 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.