Correlation Between Labor Smart and NOHO

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

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

Diversification Opportunities for Labor Smart and NOHO

0.55

Correlation Coefficient

Labor Smart  NOHO

Very weak diversification

The 3 months correlation between Labor and NOHO is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Labor Smart and NOHO Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOHO Inc and Labor Smart 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 Labor Smart are associated (or correlated) with NOHO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOHO Inc has no effect on the direction of Labor Smart i.e., Labor Smart and NOHO go up and down completely randomly.

Pair Corralation between Labor Smart and NOHO

Given the investment horizon of 90 days Labor Smart is expected to under-perform the NOHO. But the pink sheet apears to be less risky and, when comparing its historical volatility, Labor Smart is 3.51 times less risky than NOHO. The pink sheet trades about -0.16 of its potential returns per unit of risk. The NOHO Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.02  in NOHO Inc on September 12, 2024 and sell it today you would earn a total of  0.00  from holding NOHO Inc or generate 0.0% return on investment over 90 days.

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

Labor Smart  vs.  NOHO Inc

Labor Smart

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Labor Smart has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

NOHO Inc

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Labor Smart and NOHO

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

The idea behind Labor Smart and NOHO Inc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.