Correlation Between Loctek Ergonomic and National Silicon

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

Diversification Opportunities for Loctek Ergonomic and National Silicon

0.73

Correlation Coefficient

Loctek Ergonomic  National Silicon

Poor diversification

The 3 months correlation between Loctek and National is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Loctek Ergonomic Technology and National Silicon Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Silicon Industry 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 National Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Silicon Industry has no effect on the direction of Loctek Ergonomic i.e., Loctek Ergonomic and National Silicon go up and down completely randomly.

Pair Corralation between Loctek Ergonomic and National Silicon

Assuming the 90 days trading horizon Loctek Ergonomic is expected to generate 3.37 times less return on investment than National Silicon. But when comparing it to its historical volatility, Loctek Ergonomic Technology is 1.64 times less risky than National Silicon. It trades about 0.05 of its potential returns per unit of risk. National Silicon Industry is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,518  in National Silicon Industry on September 26, 2024 and sell it today you would earn a total of  500.00  from holding National Silicon Industry or generate 32.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Loctek Ergonomic Technology  vs.  National Silicon Industry

Loctek Ergonomic Tec

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Loctek Ergonomic Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Loctek Ergonomic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

National Silicon Industry

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Silicon Industry are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, National Silicon sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Loctek Ergonomic and National Silicon

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

The idea behind Loctek Ergonomic Technology and National Silicon Industry 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.