Correlation Between Loctek Ergonomic and Gifore Agricultural

Can any of the company-specific risk be diversified away by investing in both Loctek Ergonomic and Gifore Agricultural 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 Gifore Agricultural 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 Gifore Agricultural Machinery, you can compare the effects of market volatilities on Loctek Ergonomic and Gifore Agricultural 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 Gifore Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loctek Ergonomic and Gifore Agricultural.

Diversification Opportunities for Loctek Ergonomic and Gifore Agricultural

0.53

Correlation Coefficient

Loctek Ergonomic  Gifore Agricultural

Very weak diversification

The 3 months correlation between Loctek and Gifore is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Loctek Ergonomic Technology and Gifore Agricultural Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gifore Agricultural 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 Gifore Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gifore Agricultural has no effect on the direction of Loctek Ergonomic i.e., Loctek Ergonomic and Gifore Agricultural go up and down completely randomly.

Pair Corralation between Loctek Ergonomic and Gifore Agricultural

Assuming the 90 days trading horizon Loctek Ergonomic Technology is expected to under-perform the Gifore Agricultural. But the stock apears to be less risky and, when comparing its historical volatility, Loctek Ergonomic Technology is 1.76 times less risky than Gifore Agricultural. The stock trades about -0.02 of its potential returns per unit of risk. The Gifore Agricultural Machinery is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  536.00  in Gifore Agricultural Machinery on December 30, 2024 and sell it today you would earn a total of  165.00  from holding Gifore Agricultural Machinery or generate 30.78% return on investment over 90 days.

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

Loctek Ergonomic Technology  vs.  Gifore Agricultural Machinery

Loctek Ergonomic Tec

Risk-Adjusted Performance

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.

Gifore Agricultural

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gifore Agricultural Machinery are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gifore Agricultural sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Loctek Ergonomic and Gifore Agricultural

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

The idea behind Loctek Ergonomic Technology and Gifore Agricultural Machinery 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.