Correlation Between Loctek Ergonomic and KSEC Intelligent

Can any of the company-specific risk be diversified away by investing in both Loctek Ergonomic and KSEC Intelligent 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 KSEC Intelligent 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 KSEC Intelligent Technology, you can compare the effects of market volatilities on Loctek Ergonomic and KSEC Intelligent 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 KSEC Intelligent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loctek Ergonomic and KSEC Intelligent.

Diversification Opportunities for Loctek Ergonomic and KSEC Intelligent

0.66

Correlation Coefficient

Loctek Ergonomic  KSEC Intelligent

Poor diversification

The 3 months correlation between Loctek and KSEC is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Loctek Ergonomic Technology and KSEC Intelligent Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KSEC Intelligent Tec 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 KSEC Intelligent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KSEC Intelligent Tec has no effect on the direction of Loctek Ergonomic i.e., Loctek Ergonomic and KSEC Intelligent go up and down completely randomly.

Pair Corralation between Loctek Ergonomic and KSEC Intelligent

Assuming the 90 days trading horizon Loctek Ergonomic is expected to generate 1.09 times less return on investment than KSEC Intelligent. But when comparing it to its historical volatility, Loctek Ergonomic Technology is 1.25 times less risky than KSEC Intelligent. It trades about 0.05 of its potential returns per unit of risk. KSEC Intelligent Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,747  in KSEC Intelligent Technology on September 26, 2024 and sell it today you would earn a total of  120.00  from holding KSEC Intelligent Technology or generate 6.87% return on investment over 90 days.

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

Loctek Ergonomic Technology  vs.  KSEC Intelligent Technology

Loctek Ergonomic Tec

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Loctek Ergonomic Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Loctek Ergonomic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KSEC Intelligent Tec

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KSEC Intelligent Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KSEC Intelligent sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Loctek Ergonomic and KSEC Intelligent

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

The idea behind Loctek Ergonomic Technology and KSEC Intelligent 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.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.