Correlation Between Argo Living and Lotus Bio

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

By analyzing existing cross correlation between Argo Living Soils and Lotus Bio Technology Development, you can compare the effects of market volatilities on Argo Living and Lotus Bio 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 Argo Living with a short position of Lotus Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Living and Lotus Bio.

Diversification Opportunities for Argo Living and Lotus Bio

0.0

Correlation Coefficient

Argo Living  Lotus Bio

Pay attention - limited upside

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

Pair Corralation between Argo Living and Lotus Bio

Assuming the 90 days horizon Argo Living Soils is expected to generate 2.03 times more return on investment than Lotus Bio. However, Argo Living is 2.03 times more volatile than Lotus Bio Technology Development. It trades about 0.07 of its potential returns per unit of risk. Lotus Bio Technology Development is currently generating about 0.05 per unit of risk. If you would invest  11.00  in Argo Living Soils on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Argo Living Soils or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Argo Living Soils  vs.  Lotus Bio Technology Developme

Argo Living Soils

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Argo Living Soils are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Argo Living reported solid returns over the last few months and may actually be approaching a breakup point.

Lotus Bio Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lotus Bio Technology Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Lotus Bio is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Argo Living and Lotus Bio

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

The idea behind Argo Living Soils and Lotus Bio Technology Development 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.