Correlation Between LH Financial and Rojana Industrial

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

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

Diversification Opportunities for LH Financial and Rojana Industrial

0.74

Correlation Coefficient

LH Financial  Rojana Industrial

Poor diversification

The 3 months correlation between LHFG and Rojana is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding LH Financial Group and Rojana Industrial Park in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rojana Industrial Park and LH Financial 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 LH Financial Group are associated (or correlated) with Rojana Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rojana Industrial Park has no effect on the direction of LH Financial i.e., LH Financial and Rojana Industrial go up and down completely randomly.

Pair Corralation between LH Financial and Rojana Industrial

Assuming the 90 days trading horizon LH Financial Group is expected to generate 21.01 times more return on investment than Rojana Industrial. However, LH Financial is 21.01 times more volatile than Rojana Industrial Park. It trades about 0.04 of its potential returns per unit of risk. Rojana Industrial Park is currently generating about 0.01 per unit of risk. If you would invest  114.00  in LH Financial Group on October 10, 2024 and sell it today you would lose (36.00) from holding LH Financial Group or give up 31.58% of portfolio value over 90 days.

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

LH Financial Group  vs.  Rojana Industrial Park

LH Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LH Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Rojana Industrial Park

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rojana Industrial Park 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 fundamental drivers remain somewhat 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.

Pair Trading with LH Financial and Rojana Industrial

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

The idea behind LH Financial Group and Rojana Industrial Park 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.