Correlation Between Loctek Ergonomic and Panda Dairy

Can any of the company-specific risk be diversified away by investing in both Loctek Ergonomic and Panda Dairy 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 Loctek Ergonomic and Panda Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Loctek Ergonomic Technology and Panda Dairy Corp, you can compare the effects of market volatilities on Loctek Ergonomic and Panda Dairy 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 Loctek Ergonomic with a short position of Panda Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loctek Ergonomic and Panda Dairy.

Diversification Opportunities for Loctek Ergonomic and Panda Dairy

0.51

Correlation Coefficient

Loctek Ergonomic  Panda Dairy

Very weak diversification

The 3 months correlation between Loctek and Panda is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Loctek Ergonomic Technology and Panda Dairy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panda Dairy Corp and Loctek Ergonomic 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 Loctek Ergonomic Technology are associated (or correlated) with Panda Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panda Dairy Corp has no effect on the direction of Loctek Ergonomic i.e., Loctek Ergonomic and Panda Dairy go up and down completely randomly.

Pair Corralation between Loctek Ergonomic and Panda Dairy

Assuming the 90 days trading horizon Loctek Ergonomic Technology is expected to under-perform the Panda Dairy. But the stock apears to be less risky and, when comparing its historical volatility, Loctek Ergonomic Technology is 3.25 times less risky than Panda Dairy. The stock trades about -0.21 of its potential returns per unit of risk. The Panda Dairy Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,236  in Panda Dairy Corp on September 28, 2024 and sell it today you would earn a total of  454.00  from holding Panda Dairy Corp or generate 20.3% return on investment over 90 days.

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

Loctek Ergonomic Technology  vs.  Panda Dairy Corp

Loctek Ergonomic Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loctek Ergonomic Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Loctek Ergonomic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Panda Dairy Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Panda Dairy Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Panda Dairy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Loctek Ergonomic and Panda Dairy

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

The idea behind Loctek Ergonomic Technology and Panda Dairy Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.