Correlation Between Lincoln Electric and Gamehost

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

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

Diversification Opportunities for Lincoln Electric and Gamehost

0.2

Correlation Coefficient

Lincoln Electric  Gamehost

Modest diversification

The 3 months correlation between Lincoln and Gamehost is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and Gamehost in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamehost and Lincoln Electric 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 Lincoln Electric Holdings are associated (or correlated) with Gamehost. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamehost has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and Gamehost go up and down completely randomly.

Pair Corralation between Lincoln Electric and Gamehost

Given the investment horizon of 90 days Lincoln Electric is expected to generate 2.46 times less return on investment than Gamehost. But when comparing it to its historical volatility, Lincoln Electric Holdings is 1.78 times less risky than Gamehost. It trades about 0.03 of its potential returns per unit of risk. Gamehost is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  553.00  in Gamehost on October 24, 2024 and sell it today you would earn a total of  160.00  from holding Gamehost or generate 28.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	67.0%
Values	Daily Returns

Lincoln Electric Holdings  vs.  Gamehost

Lincoln Electric Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln Electric Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Lincoln Electric is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Gamehost

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gamehost has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Lincoln Electric and Gamehost

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

The idea behind Lincoln Electric Holdings and Gamehost 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.