Correlation Between LARGAN Precision and E Ink

Can any of the company-specific risk be diversified away by investing in both LARGAN Precision and E Ink 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 LARGAN Precision and E Ink into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LARGAN Precision Co and E Ink Holdings, you can compare the effects of market volatilities on LARGAN Precision and E Ink 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 LARGAN Precision with a short position of E Ink. Check out your portfolio center. Please also check ongoing floating volatility patterns of LARGAN Precision and E Ink.

Diversification Opportunities for LARGAN Precision and E Ink

-0.5

Correlation Coefficient

LARGAN Precision  E Ink

Very good diversification

The 3 months correlation between LARGAN and 8069 is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding LARGAN Precision Co and E Ink Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Ink Holdings and LARGAN Precision 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 LARGAN Precision Co are associated (or correlated) with E Ink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Ink Holdings has no effect on the direction of LARGAN Precision i.e., LARGAN Precision and E Ink go up and down completely randomly.

Pair Corralation between LARGAN Precision and E Ink

Assuming the 90 days trading horizon LARGAN Precision Co is expected to generate 0.66 times more return on investment than E Ink. However, LARGAN Precision Co is 1.52 times less risky than E Ink. It trades about 0.21 of its potential returns per unit of risk. E Ink Holdings is currently generating about -0.01 per unit of risk. If you would invest  244,000  in LARGAN Precision Co on October 8, 2024 and sell it today you would earn a total of  14,500  from holding LARGAN Precision Co or generate 5.94% return on investment over 90 days.

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

LARGAN Precision Co  vs.  E Ink Holdings

LARGAN Precision

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LARGAN Precision Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, LARGAN Precision is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

E Ink Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E Ink Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with LARGAN Precision and E Ink

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

The idea behind LARGAN Precision Co and E Ink Holdings 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..