Correlation Between SAIC and Loctek Ergonomic

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

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

Diversification Opportunities for SAIC and Loctek Ergonomic

0.7

Correlation Coefficient

SAIC  Loctek Ergonomic

Poor diversification

The 3 months correlation between SAIC and Loctek is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding SAIC Motor Corp 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 SAIC 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 SAIC Motor Corp 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 SAIC i.e., SAIC and Loctek Ergonomic go up and down completely randomly.

Pair Corralation between SAIC and Loctek Ergonomic

Assuming the 90 days trading horizon SAIC Motor Corp is expected to under-perform the Loctek Ergonomic. In addition to that, SAIC is 1.49 times more volatile than Loctek Ergonomic Technology. It trades about -0.08 of its total potential returns per unit of risk. Loctek Ergonomic Technology is currently generating about -0.09 per unit of volatility. If you would invest  1,727  in Loctek Ergonomic Technology on September 24, 2024 and sell it today you would lose (87.00) from holding Loctek Ergonomic Technology or give up 5.04% of portfolio value over 90 days.

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

SAIC Motor Corp  vs.  Loctek Ergonomic Technology

SAIC Motor Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SAIC Motor Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SAIC sustained solid returns over the last few months and may actually be approaching a breakup point.

Loctek Ergonomic Tec

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Loctek Ergonomic Technology are ranked lower than 6 (%) 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.

Pair Trading with SAIC and Loctek Ergonomic

The main advantage of trading using opposite SAIC and Loctek Ergonomic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAIC 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 SAIC Motor Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.