Correlation Between Monitor Ventures and Lotus Resources

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

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

Diversification Opportunities for Monitor Ventures and Lotus Resources

0.06

Correlation Coefficient

Monitor Ventures  Lotus Resources

Significant diversification

The 3 months correlation between Monitor and Lotus is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Monitor Ventures and Lotus Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Resources and Monitor Ventures 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 Monitor Ventures are associated (or correlated) with Lotus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Resources has no effect on the direction of Monitor Ventures i.e., Monitor Ventures and Lotus Resources go up and down completely randomly.

Pair Corralation between Monitor Ventures and Lotus Resources

Assuming the 90 days horizon Monitor Ventures is expected to under-perform the Lotus Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Monitor Ventures is 3.04 times less risky than Lotus Resources. The otc stock trades about -0.12 of its potential returns per unit of risk. The Lotus Resources Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Lotus Resources Limited on December 1, 2024 and sell it today you would lose (3.00) from holding Lotus Resources Limited or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Monitor Ventures  vs.  Lotus Resources Limited

Monitor Ventures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monitor Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Lotus Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lotus Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Monitor Ventures and Lotus Resources

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

The idea behind Monitor Ventures and Lotus Resources Limited 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 Commodity Directory module to find actively traded commodities issued by global exchanges.