Correlation Between COL Financial and LT

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

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

Diversification Opportunities for COL Financial and LT

-0.72

Correlation Coefficient

COL Financial  LT

Pay attention - limited upside

The 3 months correlation between COL and LT is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding COL Financial Group and LT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LT Group and COL Financial 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 COL Financial Group are associated (or correlated) with LT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LT Group has no effect on the direction of COL Financial i.e., COL Financial and LT go up and down completely randomly.

Pair Corralation between COL Financial and LT

Assuming the 90 days trading horizon COL Financial Group is expected to generate 3.22 times more return on investment than LT. However, COL Financial is 3.22 times more volatile than LT Group. It trades about 0.14 of its potential returns per unit of risk. LT Group is currently generating about 0.12 per unit of risk. If you would invest  160.00  in COL Financial Group on October 11, 2024 and sell it today you would earn a total of  9.00  from holding COL Financial Group or generate 5.63% return on investment over 90 days.

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

COL Financial Group  vs.  LT Group

COL Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

LT Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LT Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, LT may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with COL Financial and LT

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

The idea behind COL Financial Group and LT Group 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.