Correlation Between HOB Biotech and Loctek Ergonomic

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

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

Diversification Opportunities for HOB Biotech and Loctek Ergonomic

0.45

Correlation Coefficient

HOB Biotech  Loctek Ergonomic

Very weak diversification

The 3 months correlation between HOB and Loctek is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding HOB Biotech Group 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 HOB Biotech 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 HOB Biotech Group 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 HOB Biotech i.e., HOB Biotech and Loctek Ergonomic go up and down completely randomly.

Pair Corralation between HOB Biotech and Loctek Ergonomic

Assuming the 90 days trading horizon HOB Biotech Group is expected to under-perform the Loctek Ergonomic. In addition to that, HOB Biotech is 1.74 times more volatile than Loctek Ergonomic Technology. It trades about -0.27 of its total potential returns per unit of risk. Loctek Ergonomic Technology is currently generating about -0.08 per unit of volatility. If you would invest  1,669  in Loctek Ergonomic Technology on October 22, 2024 and sell it today you would lose (136.00) from holding Loctek Ergonomic Technology or give up 8.15% of portfolio value over 90 days.

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

HOB Biotech Group  vs.  Loctek Ergonomic Technology

HOB Biotech Group

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HOB Biotech Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HOB Biotech sustained solid returns over the last few months and may actually be approaching a breakup point.

Loctek Ergonomic Tec

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with HOB Biotech and Loctek Ergonomic

The main advantage of trading using opposite HOB Biotech and Loctek Ergonomic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOB Biotech 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 HOB Biotech Group 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..