Correlation Between Lotus Eye and G Tec

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

By analyzing existing cross correlation between Lotus Eye Hospital and G Tec Jainx Education, you can compare the effects of market volatilities on Lotus Eye and G Tec 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 Eye with a short position of G Tec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotus Eye and G Tec.

Diversification Opportunities for Lotus Eye and G Tec

0.57

Correlation Coefficient

Lotus Eye  G Tec

Very weak diversification

The 3 months correlation between Lotus and GTECJAINX is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Eye Hospital and G Tec Jainx Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Tec Jainx and Lotus Eye 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 Eye Hospital are associated (or correlated) with G Tec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Tec Jainx has no effect on the direction of Lotus Eye i.e., Lotus Eye and G Tec go up and down completely randomly.

Pair Corralation between Lotus Eye and G Tec

Assuming the 90 days trading horizon Lotus Eye Hospital is expected to generate 0.79 times more return on investment than G Tec. However, Lotus Eye Hospital is 1.26 times less risky than G Tec. It trades about -0.04 of its potential returns per unit of risk. G Tec Jainx Education is currently generating about -0.2 per unit of risk. If you would invest  7,426  in Lotus Eye Hospital on September 23, 2024 and sell it today you would lose (642.00) from holding Lotus Eye Hospital or give up 8.65% of portfolio value over 90 days.

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

Lotus Eye Hospital  vs.  G Tec Jainx Education

Lotus Eye Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lotus Eye Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

G Tec Jainx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G Tec Jainx Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Lotus Eye and G Tec

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

The idea behind Lotus Eye Hospital and G Tec Jainx Education 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.