Correlation Between Commander Resources and Lotus Resources

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

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

Diversification Opportunities for Commander Resources and Lotus Resources

-0.62

Correlation Coefficient

Commander Resources  Lotus Resources

Excellent diversification

The 3 months correlation between Commander and Lotus is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Commander Resources and Lotus Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Resources and Commander Resources 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 Commander Resources 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 Commander Resources i.e., Commander Resources and Lotus Resources go up and down completely randomly.

Pair Corralation between Commander Resources and Lotus Resources

Assuming the 90 days horizon Commander Resources is expected to under-perform the Lotus Resources. In addition to that, Commander Resources is 1.2 times more volatile than Lotus Resources Limited. It trades about -0.02 of its total potential returns per unit of risk. Lotus Resources Limited is currently generating about 0.03 per unit of volatility. If you would invest  12.00  in Lotus Resources Limited on December 27, 2024 and sell it today you would earn a total of  0.00  from holding Lotus Resources Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Commander Resources  vs.  Lotus Resources Limited

Commander Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Commander Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Lotus Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lotus Resources Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Lotus Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Commander Resources and Lotus Resources

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

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.