Correlation Between Lohilo Foods and Smart Eye

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

By analyzing existing cross correlation between Lohilo Foods AB and Smart Eye AB, you can compare the effects of market volatilities on Lohilo Foods and Smart Eye 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 Lohilo Foods with a short position of Smart Eye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lohilo Foods and Smart Eye.

Diversification Opportunities for Lohilo Foods and Smart Eye

0.42

Correlation Coefficient

Lohilo Foods  Smart Eye

Very weak diversification

The 3 months correlation between Lohilo and Smart is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lohilo Foods AB and Smart Eye AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Eye AB and Lohilo Foods 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 Lohilo Foods AB are associated (or correlated) with Smart Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Eye AB has no effect on the direction of Lohilo Foods i.e., Lohilo Foods and Smart Eye go up and down completely randomly.

Pair Corralation between Lohilo Foods and Smart Eye

Assuming the 90 days trading horizon Lohilo Foods AB is expected to generate 1.32 times more return on investment than Smart Eye. However, Lohilo Foods is 1.32 times more volatile than Smart Eye AB. It trades about -0.07 of its potential returns per unit of risk. Smart Eye AB is currently generating about -0.13 per unit of risk. If you would invest  226.00  in Lohilo Foods AB on September 5, 2024 and sell it today you would lose (83.00) from holding Lohilo Foods AB or give up 36.73% of portfolio value over 90 days.

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

Lohilo Foods AB  vs.  Smart Eye AB

Lohilo Foods AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Smart Eye AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smart Eye AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Lohilo Foods and Smart Eye

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

The idea behind Lohilo Foods AB and Smart Eye AB 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 Anywhere module to track or share privately all of your investments from the convenience of any device.