Correlation Between Leggett Platt and Northann Corp

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

By analyzing existing cross correlation between Leggett Platt Incorporated and Northann Corp, you can compare the effects of market volatilities on Leggett Platt and Northann Corp 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 Leggett Platt with a short position of Northann Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leggett Platt and Northann Corp.

Diversification Opportunities for Leggett Platt and Northann Corp

-0.6

Correlation Coefficient

Leggett Platt  Northann Corp

Excellent diversification

The 3 months correlation between Leggett and Northann is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Leggett Platt Incorporated and Northann Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northann Corp and Leggett Platt 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 Leggett Platt Incorporated are associated (or correlated) with Northann Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northann Corp has no effect on the direction of Leggett Platt i.e., Leggett Platt and Northann Corp go up and down completely randomly.

Pair Corralation between Leggett Platt and Northann Corp

Considering the 90-day investment horizon Leggett Platt Incorporated is expected to under-perform the Northann Corp. But the stock apears to be less risky and, when comparing its historical volatility, Leggett Platt Incorporated is 2.94 times less risky than Northann Corp. The stock trades about -0.04 of its potential returns per unit of risk. The Northann Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Northann Corp on September 29, 2024 and sell it today you would earn a total of  2.00  from holding Northann Corp or generate 8.33% return on investment over 90 days.

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

Leggett Platt Incorporated  vs.  Northann Corp

Leggett Platt

Risk-Adjusted Performance

0 of 100

Very Weak

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

Northann Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northann Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, Northann Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Leggett Platt and Northann Corp

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

The idea behind Leggett Platt Incorporated and Northann Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.