Correlation Between Lakeland Industries and Stark Focus

Can any of the company-specific risk be diversified away by investing in both Lakeland Industries and Stark Focus 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 Stark Focus into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lakeland Industries and Stark Focus Group, you can compare the effects of market volatilities on Lakeland Industries and Stark Focus 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 Stark Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lakeland Industries and Stark Focus.

Diversification Opportunities for Lakeland Industries and Stark Focus

0.31

Correlation Coefficient

Lakeland Industries  Stark Focus

Weak diversification

The 3 months correlation between Lakeland and Stark is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lakeland Industries and Stark Focus Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stark Focus Group 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 Stark Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stark Focus Group has no effect on the direction of Lakeland Industries i.e., Lakeland Industries and Stark Focus go up and down completely randomly.

Pair Corralation between Lakeland Industries and Stark Focus

Given the investment horizon of 90 days Lakeland Industries is expected to under-perform the Stark Focus. But the stock apears to be less risky and, when comparing its historical volatility, Lakeland Industries is 3.74 times less risky than Stark Focus. The stock trades about -0.02 of its potential returns per unit of risk. The Stark Focus Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3.54  in Stark Focus Group on September 2, 2024 and sell it today you would earn a total of  1.93  from holding Stark Focus Group or generate 54.52% return on investment over 90 days.

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

Lakeland Industries  vs.  Stark Focus Group

Lakeland Industries

Risk-Adjusted Performance

0 of 100

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.

Stark Focus Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stark Focus Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Stark Focus reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lakeland Industries and Stark Focus

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

The idea behind Lakeland Industries and Stark Focus Group 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 Stocks Directory module to find actively traded stocks across global markets.