Correlation Between Lotus Bakeries and Fluxys Belgium

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

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

Diversification Opportunities for Lotus Bakeries and Fluxys Belgium

-0.75

Correlation Coefficient

Lotus Bakeries  Fluxys Belgium

Pay attention - limited upside

The 3 months correlation between Lotus and Fluxys is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Bakeries and Fluxys Belgium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluxys Belgium and Lotus Bakeries 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 Lotus Bakeries are associated (or correlated) with Fluxys Belgium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluxys Belgium has no effect on the direction of Lotus Bakeries i.e., Lotus Bakeries and Fluxys Belgium go up and down completely randomly.

Pair Corralation between Lotus Bakeries and Fluxys Belgium

Assuming the 90 days trading horizon Lotus Bakeries is expected to under-perform the Fluxys Belgium. But the stock apears to be less risky and, when comparing its historical volatility, Lotus Bakeries is 1.15 times less risky than Fluxys Belgium. The stock trades about -0.22 of its potential returns per unit of risk. The Fluxys Belgium is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,495  in Fluxys Belgium on December 28, 2024 and sell it today you would earn a total of  425.00  from holding Fluxys Belgium or generate 28.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Lotus Bakeries  vs.  Fluxys Belgium

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.

Fluxys Belgium

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fluxys Belgium are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fluxys Belgium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lotus Bakeries and Fluxys Belgium

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

The idea behind Lotus Bakeries and Fluxys Belgium 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .