Correlation Between CIM FINANCIAL and LOTTOTECH

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

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

Diversification Opportunities for CIM FINANCIAL and LOTTOTECH

0.34

Correlation Coefficient

CIM FINANCIAL  LOTTOTECH

Weak diversification

The 3 months correlation between CIM and LOTTOTECH is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding CIM FINANCIAL SERVICES and LOTTOTECH LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOTTOTECH LTD and CIM FINANCIAL 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 CIM FINANCIAL SERVICES are associated (or correlated) with LOTTOTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOTTOTECH LTD has no effect on the direction of CIM FINANCIAL i.e., CIM FINANCIAL and LOTTOTECH go up and down completely randomly.

Pair Corralation between CIM FINANCIAL and LOTTOTECH

Assuming the 90 days trading horizon CIM FINANCIAL SERVICES is expected to generate 0.53 times more return on investment than LOTTOTECH. However, CIM FINANCIAL SERVICES is 1.88 times less risky than LOTTOTECH. It trades about 0.15 of its potential returns per unit of risk. LOTTOTECH LTD is currently generating about 0.01 per unit of risk. If you would invest  1,115  in CIM FINANCIAL SERVICES on September 13, 2024 and sell it today you would earn a total of  140.00  from holding CIM FINANCIAL SERVICES or generate 12.56% return on investment over 90 days.

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

CIM FINANCIAL SERVICES  vs.  LOTTOTECH LTD

CIM FINANCIAL SERVICES

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CIM FINANCIAL SERVICES are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, CIM FINANCIAL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

LOTTOTECH LTD

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LOTTOTECH LTD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, LOTTOTECH is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CIM FINANCIAL and LOTTOTECH

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

The idea behind CIM FINANCIAL SERVICES and LOTTOTECH LTD 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.