Correlation Between N Citron and LF

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

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

Diversification Opportunities for N Citron and LF

-0.25

Correlation Coefficient

N Citron  LF

Very good diversification

The 3 months correlation between 101400 and LF is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding N Citron and LF Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LF Co and N Citron 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 N Citron are associated (or correlated) with LF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LF Co has no effect on the direction of N Citron i.e., N Citron and LF go up and down completely randomly.

Pair Corralation between N Citron and LF

Assuming the 90 days trading horizon N Citron is expected to generate 0.73 times more return on investment than LF. However, N Citron is 1.37 times less risky than LF. It trades about 0.03 of its potential returns per unit of risk. LF Co is currently generating about -0.07 per unit of risk. If you would invest  39,700  in N Citron on December 30, 2024 and sell it today you would earn a total of  1,400  from holding N Citron or generate 3.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

N Citron  vs.  LF Co

N Citron

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in N Citron are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, N Citron may actually be approaching a critical reversion point that can send shares even higher in April 2025.

LF Co

Risk-Adjusted Performance

Very Weak

Over the last 90 days LF Co 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 N Citron and LF

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

The idea behind N Citron and LF Co 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.