Correlation Between Loctek Ergonomic and Kunwu Jiuding

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

Diversification Opportunities for Loctek Ergonomic and Kunwu Jiuding

0.8

Correlation Coefficient

Loctek Ergonomic  Kunwu Jiuding

Very poor diversification

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

Pair Corralation between Loctek Ergonomic and Kunwu Jiuding

Assuming the 90 days trading horizon Loctek Ergonomic Technology is expected to under-perform the Kunwu Jiuding. In addition to that, Loctek Ergonomic is 1.09 times more volatile than Kunwu Jiuding Investment. It trades about -0.16 of its total potential returns per unit of risk. Kunwu Jiuding Investment is currently generating about -0.05 per unit of volatility. If you would invest  1,517  in Kunwu Jiuding Investment on September 25, 2024 and sell it today you would lose (46.00) from holding Kunwu Jiuding Investment or give up 3.03% of portfolio value over 90 days.

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

Loctek Ergonomic Technology  vs.  Kunwu Jiuding Investment

Loctek Ergonomic Tec

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Loctek Ergonomic Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Loctek Ergonomic sustained solid returns over the last few months and may actually be approaching a breakup point.

Kunwu Jiuding Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kunwu Jiuding Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Kunwu Jiuding 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 Kunwu Jiuding

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

The idea behind Loctek Ergonomic Technology and Kunwu Jiuding Investment 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.