Correlation Between Lopez Holdings and ArthaLand Corp

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

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

Diversification Opportunities for Lopez Holdings and ArthaLand Corp

0.9

Correlation Coefficient

Lopez Holdings  ArthaLand Corp

Almost no diversification

The 3 months correlation between Lopez and ArthaLand is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Lopez Holdings Corp and ArthaLand Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArthaLand Corp and Lopez Holdings 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 Lopez Holdings Corp are associated (or correlated) with ArthaLand Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArthaLand Corp has no effect on the direction of Lopez Holdings i.e., Lopez Holdings and ArthaLand Corp go up and down completely randomly.

Pair Corralation between Lopez Holdings and ArthaLand Corp

Assuming the 90 days trading horizon Lopez Holdings Corp is expected to generate 0.71 times more return on investment than ArthaLand Corp. However, Lopez Holdings Corp is 1.41 times less risky than ArthaLand Corp. It trades about 0.26 of its potential returns per unit of risk. ArthaLand Corp is currently generating about 0.14 per unit of risk. If you would invest  273.00  in Lopez Holdings Corp on April 23, 2025 and sell it today you would earn a total of  127.00  from holding Lopez Holdings Corp or generate 46.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.25%
Values	Daily Returns

Lopez Holdings Corp  vs.  ArthaLand Corp

Lopez Holdings Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lopez Holdings Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Lopez Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

ArthaLand Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ArthaLand Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, ArthaLand Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lopez Holdings and ArthaLand Corp

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

The idea behind Lopez Holdings Corp and ArthaLand Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.