Correlation Between GKHT Medical and Loctek Ergonomic

Can any of the company-specific risk be diversified away by investing in both GKHT Medical and Loctek Ergonomic 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 GKHT Medical and Loctek Ergonomic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GKHT Medical Technology and Loctek Ergonomic Technology, you can compare the effects of market volatilities on GKHT Medical and Loctek Ergonomic 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 GKHT Medical with a short position of Loctek Ergonomic. Check out your portfolio center. Please also check ongoing floating volatility patterns of GKHT Medical and Loctek Ergonomic.

Diversification Opportunities for GKHT Medical and Loctek Ergonomic

0.78

Correlation Coefficient

GKHT Medical  Loctek Ergonomic

Poor diversification

The 3 months correlation between GKHT and Loctek is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding GKHT Medical Technology and Loctek Ergonomic Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loctek Ergonomic Tec and GKHT Medical 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 GKHT Medical Technology are associated (or correlated) with Loctek Ergonomic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loctek Ergonomic Tec has no effect on the direction of GKHT Medical i.e., GKHT Medical and Loctek Ergonomic go up and down completely randomly.

Pair Corralation between GKHT Medical and Loctek Ergonomic

Assuming the 90 days trading horizon GKHT Medical Technology is expected to generate 1.16 times more return on investment than Loctek Ergonomic. However, GKHT Medical is 1.16 times more volatile than Loctek Ergonomic Technology. It trades about -0.01 of its potential returns per unit of risk. Loctek Ergonomic Technology is currently generating about -0.04 per unit of risk. If you would invest  1,188  in GKHT Medical Technology on December 5, 2024 and sell it today you would lose (37.00) from holding GKHT Medical Technology or give up 3.11% of portfolio value over 90 days.

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

GKHT Medical Technology  vs.  Loctek Ergonomic Technology

GKHT Medical Technology

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with GKHT Medical and Loctek Ergonomic

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

The idea behind GKHT Medical Technology and Loctek Ergonomic Technology 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.