Correlation Between LOTTOTECH and MUA

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

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

Diversification Opportunities for LOTTOTECH and MUA

0.2

Correlation Coefficient

LOTTOTECH  MUA

Modest diversification

The 3 months correlation between LOTTOTECH and MUA is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding LOTTOTECH LTD and MUA LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MUA LTD and LOTTOTECH 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 LOTTOTECH LTD are associated (or correlated) with MUA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MUA LTD has no effect on the direction of LOTTOTECH i.e., LOTTOTECH and MUA go up and down completely randomly.

Pair Corralation between LOTTOTECH and MUA

Assuming the 90 days trading horizon LOTTOTECH is expected to generate 5.87 times less return on investment than MUA. But when comparing it to its historical volatility, LOTTOTECH LTD is 1.37 times less risky than MUA. It trades about 0.01 of its potential returns per unit of risk. MUA LTD is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,800  in MUA LTD on September 5, 2024 and sell it today you would earn a total of  400.00  from holding MUA LTD or generate 6.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

LOTTOTECH LTD  vs.  MUA LTD

LOTTOTECH LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LOTTOTECH LTD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, LOTTOTECH is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

MUA LTD

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MUA LTD are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, MUA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with LOTTOTECH and MUA

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

The idea behind LOTTOTECH LTD and MUA LTD 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.