Correlation Between Loctek Ergonomic and Yes Optoelectronics

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Can any of the company-specific risk be diversified away by investing in both Loctek Ergonomic and Yes Optoelectronics 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 Loctek Ergonomic and Yes Optoelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loctek Ergonomic Technology and Yes Optoelectronics Co, you can compare the effects of market volatilities on Loctek Ergonomic and Yes Optoelectronics 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 Loctek Ergonomic with a short position of Yes Optoelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loctek Ergonomic and Yes Optoelectronics.

Diversification Opportunities for Loctek Ergonomic and Yes Optoelectronics

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between Loctek and Yes is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Loctek Ergonomic Technology and Yes Optoelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yes Optoelectronics and Loctek Ergonomic 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 Loctek Ergonomic Technology are associated (or correlated) with Yes Optoelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yes Optoelectronics has no effect on the direction of Loctek Ergonomic i.e., Loctek Ergonomic and Yes Optoelectronics go up and down completely randomly.

Pair Corralation between Loctek Ergonomic and Yes Optoelectronics

Assuming the 90 days trading horizon Loctek Ergonomic Technology is expected to generate 0.41 times more return on investment than Yes Optoelectronics. However, Loctek Ergonomic Technology is 2.46 times less risky than Yes Optoelectronics. It trades about -0.32 of its potential returns per unit of risk. Yes Optoelectronics Co is currently generating about -0.23 per unit of risk. If you would invest  1,707  in Loctek Ergonomic Technology on October 14, 2024 and sell it today you would lose (237.00) from holding Loctek Ergonomic Technology or give up 13.88% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Loctek Ergonomic Technology  vs.  Yes Optoelectronics Co

 Performance 
       Timeline  
Loctek Ergonomic Tec 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Loctek Ergonomic Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Loctek Ergonomic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Yes Optoelectronics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Yes Optoelectronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Yes Optoelectronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Loctek Ergonomic and Yes Optoelectronics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Loctek Ergonomic and Yes Optoelectronics

The main advantage of trading using opposite Loctek Ergonomic and Yes Optoelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loctek Ergonomic position performs unexpectedly, Yes Optoelectronics 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 Yes Optoelectronics will offset losses from the drop in Yes Optoelectronics' long position.
The idea behind Loctek Ergonomic Technology and Yes Optoelectronics Co 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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