Correlation Between Loctek Ergonomic and Shanghai Zhangjiang
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By analyzing existing cross correlation between Loctek Ergonomic Technology and Shanghai Zhangjiang Hi Tech, you can compare the effects of market volatilities on Loctek Ergonomic and Shanghai Zhangjiang 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 Shanghai Zhangjiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loctek Ergonomic and Shanghai Zhangjiang.
Diversification Opportunities for Loctek Ergonomic and Shanghai Zhangjiang
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Loctek and Shanghai is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Loctek Ergonomic Technology and Shanghai Zhangjiang Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Zhangjiang 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 Shanghai Zhangjiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Zhangjiang has no effect on the direction of Loctek Ergonomic i.e., Loctek Ergonomic and Shanghai Zhangjiang go up and down completely randomly.
Pair Corralation between Loctek Ergonomic and Shanghai Zhangjiang
Assuming the 90 days trading horizon Loctek Ergonomic is expected to generate 2.28 times less return on investment than Shanghai Zhangjiang. But when comparing it to its historical volatility, Loctek Ergonomic Technology is 1.3 times less risky than Shanghai Zhangjiang. It trades about 0.05 of its potential returns per unit of risk. Shanghai Zhangjiang Hi Tech is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,860 in Shanghai Zhangjiang Hi Tech on November 9, 2024 and sell it today you would earn a total of 706.00 from holding Shanghai Zhangjiang Hi Tech or generate 37.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loctek Ergonomic Technology vs. Shanghai Zhangjiang Hi Tech
Performance |
| Timeline |
| Loctek Ergonomic Tec |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Shanghai Zhangjiang |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Loctek Ergonomic and Shanghai Zhangjiang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loctek Ergonomic and Shanghai Zhangjiang
The main advantage of trading using opposite Loctek Ergonomic and Shanghai Zhangjiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loctek Ergonomic position performs unexpectedly, Shanghai Zhangjiang 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 Shanghai Zhangjiang will offset losses from the drop in Shanghai Zhangjiang's long position.The idea behind Loctek Ergonomic Technology and Shanghai Zhangjiang Hi Tech 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.Check out your portfolio center.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 Stocks Directory module to find actively traded stocks across global markets.
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