Correlation Between KBC Ancora and Lotus Bakeries

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

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

Diversification Opportunities for KBC Ancora and Lotus Bakeries

-0.84

Correlation Coefficient

KBC Ancora  Lotus Bakeries

Pay attention - limited upside

The 3 months correlation between KBC and Lotus is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding KBC Ancora and Lotus Bakeries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Bakeries and KBC Ancora 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 KBC Ancora are associated (or correlated) with Lotus Bakeries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Bakeries has no effect on the direction of KBC Ancora i.e., KBC Ancora and Lotus Bakeries go up and down completely randomly.

Pair Corralation between KBC Ancora and Lotus Bakeries

Assuming the 90 days trading horizon KBC Ancora is expected to generate 0.7 times more return on investment than Lotus Bakeries. However, KBC Ancora is 1.44 times less risky than Lotus Bakeries. It trades about 0.2 of its potential returns per unit of risk. Lotus Bakeries is currently generating about -0.22 per unit of risk. If you would invest  4,990  in KBC Ancora on December 20, 2024 and sell it today you would earn a total of  760.00  from holding KBC Ancora or generate 15.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

KBC Ancora  vs.  Lotus Bakeries

KBC Ancora

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KBC Ancora are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, KBC Ancora reported solid returns over the last few months and may actually be approaching a breakup point.

Lotus Bakeries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lotus Bakeries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with KBC Ancora and Lotus Bakeries

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

The idea behind KBC Ancora and Lotus Bakeries 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.