Correlation Between Kontoor Brands and Lakeland Industries

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

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

Diversification Opportunities for Kontoor Brands and Lakeland Industries

-0.36

Correlation Coefficient

Kontoor Brands  Lakeland Industries

Very good diversification

The 3 months correlation between Kontoor and Lakeland is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Kontoor Brands and Lakeland Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeland Industries and Kontoor Brands 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 Kontoor Brands are associated (or correlated) with Lakeland Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeland Industries has no effect on the direction of Kontoor Brands i.e., Kontoor Brands and Lakeland Industries go up and down completely randomly.

Pair Corralation between Kontoor Brands and Lakeland Industries

Considering the 90-day investment horizon Kontoor Brands is expected to under-perform the Lakeland Industries. But the stock apears to be less risky and, when comparing its historical volatility, Kontoor Brands is 1.08 times less risky than Lakeland Industries. The stock trades about -0.12 of its potential returns per unit of risk. The Lakeland Industries is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,261  in Lakeland Industries on November 28, 2024 and sell it today you would earn a total of  44.00  from holding Lakeland Industries or generate 1.95% return on investment over 90 days.

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

Kontoor Brands  vs.  Lakeland Industries

Kontoor Brands

Risk-Adjusted Performance

Very Weak

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

Lakeland Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lakeland Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking signals, Lakeland Industries is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kontoor Brands and Lakeland Industries

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

The idea behind Kontoor Brands and Lakeland Industries 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.