Correlation Between Foxx Development and Latham

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

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

Diversification Opportunities for Foxx Development and Latham

-0.08

Correlation Coefficient

Foxx Development  Latham

Good diversification

The 3 months correlation between Foxx and Latham is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Foxx Development Holdings and Latham Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Latham Group and Foxx Development 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 Foxx Development Holdings are associated (or correlated) with Latham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Latham Group has no effect on the direction of Foxx Development i.e., Foxx Development and Latham go up and down completely randomly.

Pair Corralation between Foxx Development and Latham

Given the investment horizon of 90 days Foxx Development Holdings is expected to generate 2.63 times more return on investment than Latham. However, Foxx Development is 2.63 times more volatile than Latham Group. It trades about 0.0 of its potential returns per unit of risk. Latham Group is currently generating about -0.22 per unit of risk. If you would invest  549.00  in Foxx Development Holdings on October 11, 2024 and sell it today you would lose (46.00) from holding Foxx Development Holdings or give up 8.38% of portfolio value over 90 days.

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

Foxx Development Holdings  vs.  Latham Group

Foxx Development Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Foxx Development Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Latham Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Latham Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Latham is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Foxx Development and Latham

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

The idea behind Foxx Development Holdings and Latham 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.