Correlation Between Lotus Bakeries and Foreign Bond
Can any of the company-specific risk be diversified away by investing in both Lotus Bakeries and Foreign Bond 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 Bakeries and Foreign Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotus Bakeries and Foreign Bond Fund, you can compare the effects of market volatilities on Lotus Bakeries and Foreign Bond 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 Bakeries with a short position of Foreign Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotus Bakeries and Foreign Bond.
Diversification Opportunities for Lotus Bakeries and Foreign Bond
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lotus and Foreign is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lotus Bakeries and Foreign Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Bond and Lotus Bakeries 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 Bakeries are associated (or correlated) with Foreign Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Bond has no effect on the direction of Lotus Bakeries i.e., Lotus Bakeries and Foreign Bond go up and down completely randomly.
Pair Corralation between Lotus Bakeries and Foreign Bond
Assuming the 90 days trading horizon Lotus Bakeries is expected to generate 4.06 times more return on investment than Foreign Bond. However, Lotus Bakeries is 4.06 times more volatile than Foreign Bond Fund. It trades about 0.24 of its potential returns per unit of risk. Foreign Bond Fund is currently generating about -0.25 per unit of risk. If you would invest 873,000 in Lotus Bakeries on January 25, 2024 and sell it today you would earn a total of 57,000 from holding Lotus Bakeries or generate 6.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lotus Bakeries vs. Foreign Bond Fund
Performance |
| Timeline |
| Lotus Bakeries |
| Foreign Bond |
Lotus Bakeries and Foreign Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotus Bakeries and Foreign Bond
The main advantage of trading using opposite Lotus Bakeries and Foreign Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotus Bakeries position performs unexpectedly, Foreign Bond 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 Foreign Bond will offset losses from the drop in Foreign Bond's long position.| Lotus Bakeries vs. Sofina Socit Anonyme | Lotus Bakeries vs. Ackermans Van Haaren | Lotus Bakeries vs. Melexis NV | Lotus Bakeries vs. DIeteren Group SA |
| Foreign Bond vs. Capital World Bond | Foreign Bond vs. Capital World Bond | Foreign Bond vs. Capital World Bond | Foreign Bond vs. Capital World Bond |
Check out your portfolio center.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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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