Correlation Between LOTTOTECH and PLASTIC INDUSTRY

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

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

Diversification Opportunities for LOTTOTECH and PLASTIC INDUSTRY

0.08

Correlation Coefficient

LOTTOTECH  PLASTIC INDUSTRY

Significant diversification

The 3 months correlation between LOTTOTECH and PLASTIC is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding LOTTOTECH LTD and PLASTIC INDUSTRY LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLASTIC INDUSTRY 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 PLASTIC INDUSTRY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLASTIC INDUSTRY LTD has no effect on the direction of LOTTOTECH i.e., LOTTOTECH and PLASTIC INDUSTRY go up and down completely randomly.

Pair Corralation between LOTTOTECH and PLASTIC INDUSTRY

Assuming the 90 days trading horizon LOTTOTECH LTD is expected to under-perform the PLASTIC INDUSTRY. In addition to that, LOTTOTECH is 1.01 times more volatile than PLASTIC INDUSTRY LTD. It trades about -0.01 of its total potential returns per unit of risk. PLASTIC INDUSTRY LTD is currently generating about 0.05 per unit of volatility. If you would invest  4,375  in PLASTIC INDUSTRY LTD on December 4, 2024 and sell it today you would earn a total of  125.00  from holding PLASTIC INDUSTRY LTD or generate 2.86% return on investment over 90 days.

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

LOTTOTECH LTD  vs.  PLASTIC INDUSTRY LTD

LOTTOTECH LTD

Risk-Adjusted Performance

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

PLASTIC INDUSTRY LTD

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PLASTIC INDUSTRY LTD are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, PLASTIC INDUSTRY is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with LOTTOTECH and PLASTIC INDUSTRY

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

The idea behind LOTTOTECH LTD and PLASTIC INDUSTRY 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 Transaction History module to view history of all your transactions and understand their impact on performance.