Correlation Between Loctek Ergonomic and 516220

Can any of the company-specific risk be diversified away by investing in both Loctek Ergonomic and 516220 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 516220 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 516220, you can compare the effects of market volatilities on Loctek Ergonomic and 516220 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 516220. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loctek Ergonomic and 516220.

Diversification Opportunities for Loctek Ergonomic and 516220

0.8

Correlation Coefficient

Loctek Ergonomic  516220

Very poor diversification

The 3 months correlation between Loctek and 516220 is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Loctek Ergonomic Technology and 516220 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 516220 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 516220. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 516220 has no effect on the direction of Loctek Ergonomic i.e., Loctek Ergonomic and 516220 go up and down completely randomly.

Pair Corralation between Loctek Ergonomic and 516220

Assuming the 90 days trading horizon Loctek Ergonomic Technology is expected to under-perform the 516220. In addition to that, Loctek Ergonomic is 2.09 times more volatile than 516220. It trades about -0.06 of its total potential returns per unit of risk. 516220 is currently generating about -0.04 per unit of volatility. If you would invest  67.00  in 516220 on December 1, 2024 and sell it today you would lose (2.00) from holding 516220 or give up 2.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.31%
Values	Daily Returns

Loctek Ergonomic Technology  vs.  516220

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

516220

Risk-Adjusted Performance

Very Weak

Over the last 90 days 516220 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 516220 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Loctek Ergonomic and 516220

The main advantage of trading using opposite Loctek Ergonomic and 516220 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loctek Ergonomic position performs unexpectedly, 516220 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 516220 will offset losses from the drop in 516220's long position.

The idea behind Loctek Ergonomic Technology and 516220 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..