Correlation Between Loctek Ergonomic and Elec Tech

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

By analyzing existing cross correlation between Loctek Ergonomic Technology and Elec Tech International Co, you can compare the effects of market volatilities on Loctek Ergonomic and Elec Tech 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 Loctek Ergonomic with a short position of Elec Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loctek Ergonomic and Elec Tech.

Diversification Opportunities for Loctek Ergonomic and Elec Tech

0.39

Correlation Coefficient

Loctek Ergonomic  Elec Tech

Weak diversification

The 3 months correlation between Loctek and Elec is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Loctek Ergonomic Technology and Elec Tech International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elec Tech International and Loctek Ergonomic 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 Loctek Ergonomic Technology are associated (or correlated) with Elec Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elec Tech International has no effect on the direction of Loctek Ergonomic i.e., Loctek Ergonomic and Elec Tech go up and down completely randomly.

Pair Corralation between Loctek Ergonomic and Elec Tech

Assuming the 90 days trading horizon Loctek Ergonomic Technology is expected to under-perform the Elec Tech. But the stock apears to be less risky and, when comparing its historical volatility, Loctek Ergonomic Technology is 1.33 times less risky than Elec Tech. The stock trades about -0.01 of its potential returns per unit of risk. The Elec Tech International Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  126.00  in Elec Tech International Co on October 10, 2024 and sell it today you would earn a total of  38.00  from holding Elec Tech International Co or generate 30.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Loctek Ergonomic Technology  vs.  Elec Tech International Co

Loctek Ergonomic Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loctek Ergonomic Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Loctek Ergonomic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Elec Tech International

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elec Tech International Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Elec Tech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Loctek Ergonomic and Elec Tech

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

The idea behind Loctek Ergonomic Technology and Elec Tech International 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..