Correlation Between NGEx Minerals and Lotus Resources

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

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

Diversification Opportunities for NGEx Minerals and Lotus Resources

0.19

Correlation Coefficient

NGEx Minerals  Lotus Resources

Average diversification

The 3 months correlation between NGEx and Lotus is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding NGEx Minerals and Lotus Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotus Resources and NGEx Minerals 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 NGEx Minerals are associated (or correlated) with Lotus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotus Resources has no effect on the direction of NGEx Minerals i.e., NGEx Minerals and Lotus Resources go up and down completely randomly.

Pair Corralation between NGEx Minerals and Lotus Resources

Assuming the 90 days horizon NGEx Minerals is expected to generate 0.47 times more return on investment than Lotus Resources. However, NGEx Minerals is 2.12 times less risky than Lotus Resources. It trades about 0.04 of its potential returns per unit of risk. Lotus Resources Limited is currently generating about 0.0 per unit of risk. If you would invest  929.00  in NGEx Minerals on December 28, 2024 and sell it today you would earn a total of  38.00  from holding NGEx Minerals or generate 4.09% return on investment over 90 days.

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

NGEx Minerals  vs.  Lotus Resources Limited

NGEx Minerals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NGEx Minerals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NGEx Minerals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Lotus Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lotus Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Lotus Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NGEx Minerals and Lotus Resources

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

The idea behind NGEx Minerals and Lotus Resources Limited 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.