Correlation Between Lakeland Industries and Companhia Paranaense

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

Diversification Opportunities for Lakeland Industries and Companhia Paranaense

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Lakeland and Companhia is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lakeland Industries and Companhia Paranaense de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Paranaense and Lakeland Industries 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 Lakeland Industries are associated (or correlated) with Companhia Paranaense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Paranaense has no effect on the direction of Lakeland Industries i.e., Lakeland Industries and Companhia Paranaense go up and down completely randomly.

Pair Corralation between Lakeland Industries and Companhia Paranaense

Given the investment horizon of 90 days Lakeland Industries is expected to generate 0.95 times more return on investment than Companhia Paranaense. However, Lakeland Industries is 1.05 times less risky than Companhia Paranaense. It trades about 0.23 of its potential returns per unit of risk. Companhia Paranaense de is currently generating about -0.07 per unit of risk. If you would invest  1,941  in Lakeland Industries on August 31, 2024 and sell it today you would earn a total of  242.00  from holding Lakeland Industries or generate 12.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Lakeland Industries  vs.  Companhia Paranaense de

 Performance 
       Timeline  
Lakeland Industries 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Lakeland Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, Lakeland Industries is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Companhia Paranaense 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Companhia Paranaense de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Lakeland Industries and Companhia Paranaense Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lakeland Industries and Companhia Paranaense

The main advantage of trading using opposite Lakeland Industries and Companhia Paranaense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lakeland Industries position performs unexpectedly, Companhia Paranaense 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 Companhia Paranaense will offset losses from the drop in Companhia Paranaense's long position.
The idea behind Lakeland Industries and Companhia Paranaense de 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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