Correlation Between Lohakit Metal and NC Housing

Can any of the company-specific risk be diversified away by investing in both Lohakit Metal and NC Housing 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 Lohakit Metal and NC Housing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lohakit Metal Public and NC Housing Public, you can compare the effects of market volatilities on Lohakit Metal and NC Housing 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 Lohakit Metal with a short position of NC Housing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lohakit Metal and NC Housing.

Diversification Opportunities for Lohakit Metal and NC Housing

0.39

Correlation Coefficient

Lohakit Metal  NC Housing

Weak diversification

The 3 months correlation between Lohakit and NCH is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Lohakit Metal Public and NC Housing Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NC Housing Public and Lohakit Metal 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 Lohakit Metal Public are associated (or correlated) with NC Housing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NC Housing Public has no effect on the direction of Lohakit Metal i.e., Lohakit Metal and NC Housing go up and down completely randomly.

Pair Corralation between Lohakit Metal and NC Housing

Assuming the 90 days trading horizon Lohakit Metal Public is expected to generate 0.36 times more return on investment than NC Housing. However, Lohakit Metal Public is 2.78 times less risky than NC Housing. It trades about 0.09 of its potential returns per unit of risk. NC Housing Public is currently generating about -0.06 per unit of risk. If you would invest  404.00  in Lohakit Metal Public on February 3, 2024 and sell it today you would earn a total of  2.00  from holding Lohakit Metal Public or generate 0.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Lohakit Metal Public  vs.  NC Housing Public

Lohakit Metal Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lohakit Metal Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Lohakit Metal is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

NC Housing Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NC Housing Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, NC Housing is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Lohakit Metal and NC Housing

The main advantage of trading using opposite Lohakit Metal and NC Housing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lohakit Metal position performs unexpectedly, NC Housing 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 NC Housing will offset losses from the drop in NC Housing's long position.

The idea behind Lohakit Metal Public and NC Housing Public 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.