Correlation Between LARGAN Precision and Center Laboratories
Can any of the company-specific risk be diversified away by investing in both LARGAN Precision and Center Laboratories 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 LARGAN Precision and Center Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LARGAN Precision Co and Center Laboratories, you can compare the effects of market volatilities on LARGAN Precision and Center Laboratories 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 LARGAN Precision with a short position of Center Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of LARGAN Precision and Center Laboratories.
Diversification Opportunities for LARGAN Precision and Center Laboratories
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LARGAN and Center is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding LARGAN Precision Co and Center Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Center Laboratories and LARGAN Precision 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 LARGAN Precision Co are associated (or correlated) with Center Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Center Laboratories has no effect on the direction of LARGAN Precision i.e., LARGAN Precision and Center Laboratories go up and down completely randomly.
Pair Corralation between LARGAN Precision and Center Laboratories
Assuming the 90 days trading horizon LARGAN Precision Co is expected to generate 0.57 times more return on investment than Center Laboratories. However, LARGAN Precision Co is 1.74 times less risky than Center Laboratories. It trades about 0.02 of its potential returns per unit of risk. Center Laboratories is currently generating about 0.01 per unit of risk. If you would invest 199,869 in LARGAN Precision Co on January 16, 2025 and sell it today you would earn a total of 17,131 from holding LARGAN Precision Co or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LARGAN Precision Co vs. Center Laboratories
Performance |
| Timeline |
| LARGAN Precision |
| Center Laboratories |
LARGAN Precision and Center Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LARGAN Precision and Center Laboratories
The main advantage of trading using opposite LARGAN Precision and Center Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LARGAN Precision position performs unexpectedly, Center Laboratories 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 Center Laboratories will offset losses from the drop in Center Laboratories' long position.| LARGAN Precision vs. MediaTek | LARGAN Precision vs. Hon Hai Precision | LARGAN Precision vs. Delta Electronics | LARGAN Precision vs. Catcher Technology Co |
| Center Laboratories vs. Handa Pharmaceuticals | Center Laboratories vs. GeneFerm Biotechnology Co | Center Laboratories vs. Ruentex Development Co | Center Laboratories vs. Symtek Automation Asia |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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