Correlation Between Loctek Ergonomic and Great Sun

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Loctek Ergonomic and Great Sun 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 Great Sun 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 Great Sun Foods Co, you can compare the effects of market volatilities on Loctek Ergonomic and Great Sun 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 Great Sun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loctek Ergonomic and Great Sun.

Diversification Opportunities for Loctek Ergonomic and Great Sun

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Loctek and Great is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Loctek Ergonomic Technology and Great Sun Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Sun Foods 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 Great Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Sun Foods has no effect on the direction of Loctek Ergonomic i.e., Loctek Ergonomic and Great Sun go up and down completely randomly.

Pair Corralation between Loctek Ergonomic and Great Sun

Assuming the 90 days trading horizon Loctek Ergonomic is expected to generate 7.03 times less return on investment than Great Sun. But when comparing it to its historical volatility, Loctek Ergonomic Technology is 1.49 times less risky than Great Sun. It trades about 0.02 of its potential returns per unit of risk. Great Sun Foods Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  301.00  in Great Sun Foods Co on September 25, 2024 and sell it today you would earn a total of  153.00  from holding Great Sun Foods Co or generate 50.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Loctek Ergonomic Technology  vs.  Great Sun Foods Co

 Performance 
       Timeline  
Loctek Ergonomic Tec 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Loctek Ergonomic Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Loctek Ergonomic sustained solid returns over the last few months and may actually be approaching a breakup point.
Great Sun Foods 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Great Sun Foods Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Great Sun sustained solid returns over the last few months and may actually be approaching a breakup point.

Loctek Ergonomic and Great Sun Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Loctek Ergonomic and Great Sun

The main advantage of trading using opposite Loctek Ergonomic and Great Sun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loctek Ergonomic position performs unexpectedly, Great Sun 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 Great Sun will offset losses from the drop in Great Sun's long position.
The idea behind Loctek Ergonomic Technology and Great Sun Foods 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.
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

Other Complementary Tools

Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance