Correlation Between Beeks Trading and Lowland Investment

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

By analyzing existing cross correlation between Beeks Trading and Lowland Investment Co, you can compare the effects of market volatilities on Beeks Trading and Lowland Investment 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 Beeks Trading with a short position of Lowland Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beeks Trading and Lowland Investment.

Diversification Opportunities for Beeks Trading and Lowland Investment

-0.23

Correlation Coefficient

Beeks Trading  Lowland Investment

Very good diversification

The 3 months correlation between Beeks and Lowland is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Beeks Trading and Lowland Investment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowland Investment and Beeks Trading 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 Beeks Trading are associated (or correlated) with Lowland Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowland Investment has no effect on the direction of Beeks Trading i.e., Beeks Trading and Lowland Investment go up and down completely randomly.

Pair Corralation between Beeks Trading and Lowland Investment

Assuming the 90 days trading horizon Beeks Trading is expected to generate 3.08 times more return on investment than Lowland Investment. However, Beeks Trading is 3.08 times more volatile than Lowland Investment Co. It trades about 0.02 of its potential returns per unit of risk. Lowland Investment Co is currently generating about -0.07 per unit of risk. If you would invest  26,800  in Beeks Trading on September 2, 2024 and sell it today you would earn a total of  200.00  from holding Beeks Trading or generate 0.75% return on investment over 90 days.

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

Beeks Trading  vs.  Lowland Investment Co

Beeks Trading

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Beeks Trading are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Beeks Trading is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Lowland Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lowland Investment Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Lowland Investment is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Beeks Trading and Lowland Investment

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

The idea behind Beeks Trading and Lowland Investment Co 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..