Correlation Between New China and Loctek Ergonomic
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By analyzing existing cross correlation between New China Life and Loctek Ergonomic Technology, you can compare the effects of market volatilities on New China and Loctek Ergonomic 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 New China with a short position of Loctek Ergonomic. Check out your portfolio center. Please also check ongoing floating volatility patterns of New China and Loctek Ergonomic.
Diversification Opportunities for New China and Loctek Ergonomic
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between New and Loctek is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding New China Life and Loctek Ergonomic Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loctek Ergonomic Tec and New China 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 New China Life are associated (or correlated) with Loctek Ergonomic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loctek Ergonomic Tec has no effect on the direction of New China i.e., New China and Loctek Ergonomic go up and down completely randomly.
Pair Corralation between New China and Loctek Ergonomic
Assuming the 90 days trading horizon New China Life is expected to generate 0.96 times more return on investment than Loctek Ergonomic. However, New China Life is 1.04 times less risky than Loctek Ergonomic. It trades about 0.13 of its potential returns per unit of risk. Loctek Ergonomic Technology is currently generating about 0.11 per unit of risk. If you would invest 4,568 in New China Life on November 7, 2024 and sell it today you would earn a total of 195.00 from holding New China Life or generate 4.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New China Life vs. Loctek Ergonomic Technology
Performance |
| Timeline |
| New China Life |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Loctek Ergonomic Tec |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
New China and Loctek Ergonomic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New China and Loctek Ergonomic
The main advantage of trading using opposite New China and Loctek Ergonomic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New China position performs unexpectedly, Loctek Ergonomic 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 Loctek Ergonomic will offset losses from the drop in Loctek Ergonomic's long position.The idea behind New China Life and Loctek Ergonomic Technology 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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