Correlation Between LGL and Knowles Cor

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

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

Diversification Opportunities for LGL and Knowles Cor

-0.17

Correlation Coefficient

LGL  Knowles Cor

Good diversification

The 3 months correlation between LGL and Knowles is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding LGL Group and Knowles Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knowles Cor and LGL 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 LGL Group are associated (or correlated) with Knowles Cor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knowles Cor has no effect on the direction of LGL i.e., LGL and Knowles Cor go up and down completely randomly.

Pair Corralation between LGL and Knowles Cor

Considering the 90-day investment horizon LGL is expected to generate 11.55 times less return on investment than Knowles Cor. In addition to that, LGL is 1.72 times more volatile than Knowles Cor. It trades about 0.01 of its total potential returns per unit of risk. Knowles Cor is currently generating about 0.1 per unit of volatility. If you would invest  1,739  in Knowles Cor on September 2, 2024 and sell it today you would earn a total of  207.00  from holding Knowles Cor or generate 11.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

LGL Group  vs.  Knowles Cor

LGL Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LGL Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, LGL is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Knowles Cor

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knowles Cor are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Knowles Cor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with LGL and Knowles Cor

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

The idea behind LGL Group and Knowles Cor 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.