Correlation Between Todos Medical Ltd and Lizhan Environmental

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

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

Diversification Opportunities for Todos Medical Ltd and Lizhan Environmental

0.0

Correlation Coefficient

Todos Medical Ltd  Lizhan Environmental

Pay attention - limited upside

The 3 months correlation between Todos and Lizhan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Todos Medical and Lizhan Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lizhan Environmental and Todos Medical Ltd 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 Todos Medical are associated (or correlated) with Lizhan Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lizhan Environmental has no effect on the direction of Todos Medical Ltd i.e., Todos Medical Ltd and Lizhan Environmental go up and down completely randomly.

Pair Corralation between Todos Medical Ltd and Lizhan Environmental

If you would invest  0.01  in Lizhan Environmental on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Lizhan Environmental or generate 0.0% return on investment over 90 days.

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

Todos Medical  vs.  Lizhan Environmental

Todos Medical Ltd

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lizhan Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Todos Medical Ltd and Lizhan Environmental

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

The idea behind Todos Medical and Lizhan Environmental 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.