Correlation Between Huasi Agricultural and Lecron Energy

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

By analyzing existing cross correlation between Huasi Agricultural Development and Lecron Energy Saving, you can compare the effects of market volatilities on Huasi Agricultural and Lecron Energy 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 Huasi Agricultural with a short position of Lecron Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huasi Agricultural and Lecron Energy.

Diversification Opportunities for Huasi Agricultural and Lecron Energy

0.75

Correlation Coefficient

Huasi Agricultural  Lecron Energy

Poor diversification

The 3 months correlation between Huasi and Lecron is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Huasi Agricultural Development and Lecron Energy Saving in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lecron Energy Saving and Huasi Agricultural 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 Huasi Agricultural Development are associated (or correlated) with Lecron Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lecron Energy Saving has no effect on the direction of Huasi Agricultural i.e., Huasi Agricultural and Lecron Energy go up and down completely randomly.

Pair Corralation between Huasi Agricultural and Lecron Energy

Assuming the 90 days trading horizon Huasi Agricultural Development is expected to generate 0.6 times more return on investment than Lecron Energy. However, Huasi Agricultural Development is 1.66 times less risky than Lecron Energy. It trades about 0.07 of its potential returns per unit of risk. Lecron Energy Saving is currently generating about -0.09 per unit of risk. If you would invest  388.00  in Huasi Agricultural Development on December 25, 2024 and sell it today you would earn a total of  31.00  from holding Huasi Agricultural Development or generate 7.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.28%
Values	Daily Returns

Huasi Agricultural Development  vs.  Lecron Energy Saving

Huasi Agricultural

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Huasi Agricultural Development are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Huasi Agricultural may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Lecron Energy Saving

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lecron Energy Saving has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Huasi Agricultural and Lecron Energy

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

The idea behind Huasi Agricultural Development and Lecron Energy Saving 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.