Correlation Between Lotus Bakeries and Greenyard

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

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

Diversification Opportunities for Lotus Bakeries and Greenyard

0.89

Correlation Coefficient

Lotus Bakeries  Greenyard

Very poor diversification

The 3 months correlation between Lotus and Greenyard is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Bakeries and Greenyard NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenyard NV 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 Greenyard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenyard NV has no effect on the direction of Lotus Bakeries i.e., Lotus Bakeries and Greenyard go up and down completely randomly.

Pair Corralation between Lotus Bakeries and Greenyard

Assuming the 90 days trading horizon Lotus Bakeries is expected to generate 1.0 times more return on investment than Greenyard. However, Lotus Bakeries is 1.0 times less risky than Greenyard. It trades about 0.08 of its potential returns per unit of risk. Greenyard NV is currently generating about -0.02 per unit of risk. If you would invest  583,551  in Lotus Bakeries on October 11, 2024 and sell it today you would earn a total of  500,449  from holding Lotus Bakeries or generate 85.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Lotus Bakeries  vs.  Greenyard NV

Lotus Bakeries

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Greenyard NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenyard NV 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 fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lotus Bakeries and Greenyard

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

The idea behind Lotus Bakeries and Greenyard NV 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.