Correlation Between Lottery and Ampol

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

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

Diversification Opportunities for Lottery and Ampol

-0.15

Correlation Coefficient

Lottery  Ampol

Good diversification

The 3 months correlation between Lottery and Ampol is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lottery and Ampol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampol and Lottery 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 Lottery are associated (or correlated) with Ampol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampol has no effect on the direction of Lottery i.e., Lottery and Ampol go up and down completely randomly.

Pair Corralation between Lottery and Ampol

Assuming the 90 days trading horizon Lottery is expected to generate 1.62 times less return on investment than Ampol. But when comparing it to its historical volatility, Lottery is 1.14 times less risky than Ampol. It trades about 0.03 of its potential returns per unit of risk. Ampol is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,453  in Ampol on October 21, 2024 and sell it today you would earn a total of  515.00  from holding Ampol or generate 20.99% return on investment over 90 days.

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

Lottery  vs.  Ampol

Lottery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lottery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Lottery is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Ampol

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ampol are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Ampol is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lottery and Ampol

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

The idea behind Lottery and Ampol 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.