Correlation Between Lincoln Electric and CERo Therapeutics
Can any of the company-specific risk be diversified away by investing in both Lincoln Electric and CERo Therapeutics 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 Lincoln Electric and CERo Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lincoln Electric Holdings and CERo Therapeutics Holdings, you can compare the effects of market volatilities on Lincoln Electric and CERo Therapeutics 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 Lincoln Electric with a short position of CERo Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lincoln Electric and CERo Therapeutics.
Diversification Opportunities for Lincoln Electric and CERo Therapeutics
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lincoln and CERo is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Lincoln Electric Holdings and CERo Therapeutics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CERo Therapeutics and Lincoln Electric 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 Lincoln Electric Holdings are associated (or correlated) with CERo Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CERo Therapeutics has no effect on the direction of Lincoln Electric i.e., Lincoln Electric and CERo Therapeutics go up and down completely randomly.
Pair Corralation between Lincoln Electric and CERo Therapeutics
Given the investment horizon of 90 days Lincoln Electric is expected to generate 23.88 times less return on investment than CERo Therapeutics. But when comparing it to its historical volatility, Lincoln Electric Holdings is 13.23 times less risky than CERo Therapeutics. It trades about 0.17 of its potential returns per unit of risk. CERo Therapeutics Holdings is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 0.90 in CERo Therapeutics Holdings on October 28, 2024 and sell it today you would earn a total of 1.05 from holding CERo Therapeutics Holdings or generate 116.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lincoln Electric Holdings vs. CERo Therapeutics Holdings
Performance |
| Timeline |
| Lincoln Electric Holdings |
| CERo Therapeutics |
Lincoln Electric and CERo Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lincoln Electric and CERo Therapeutics
The main advantage of trading using opposite Lincoln Electric and CERo Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lincoln Electric position performs unexpectedly, CERo Therapeutics 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 CERo Therapeutics will offset losses from the drop in CERo Therapeutics' long position.| Lincoln Electric vs. Kennametal | Lincoln Electric vs. Toro Co | Lincoln Electric vs. Snap On | Lincoln Electric vs. RBC Bearings Incorporated |
| CERo Therapeutics vs. SEI Investments | CERo Therapeutics vs. Taiwan Semiconductor Manufacturing | CERo Therapeutics vs. MACOM Technology Solutions | CERo Therapeutics vs. Globalfoundries |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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