Correlation Between Lobe Sciences and Grey Cloak

Can any of the company-specific risk be diversified away by investing in both Lobe Sciences and Grey Cloak 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 Lobe Sciences and Grey Cloak into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lobe Sciences and Grey Cloak Tech, you can compare the effects of market volatilities on Lobe Sciences and Grey Cloak 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 Lobe Sciences with a short position of Grey Cloak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lobe Sciences and Grey Cloak.

Diversification Opportunities for Lobe Sciences and Grey Cloak

0.18

Correlation Coefficient

Lobe Sciences  Grey Cloak

Average diversification

The 3 months correlation between Lobe and Grey is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lobe Sciences and Grey Cloak Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grey Cloak Tech and Lobe Sciences 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 Lobe Sciences are associated (or correlated) with Grey Cloak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grey Cloak Tech has no effect on the direction of Lobe Sciences i.e., Lobe Sciences and Grey Cloak go up and down completely randomly.

Pair Corralation between Lobe Sciences and Grey Cloak

Assuming the 90 days horizon Lobe Sciences is expected to generate 13.38 times more return on investment than Grey Cloak. However, Lobe Sciences is 13.38 times more volatile than Grey Cloak Tech. It trades about 0.25 of its potential returns per unit of risk. Grey Cloak Tech is currently generating about 0.08 per unit of risk. If you would invest  0.13  in Lobe Sciences on September 19, 2024 and sell it today you would lose (0.01) from holding Lobe Sciences or give up 7.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Lobe Sciences  vs.  Grey Cloak Tech

Lobe Sciences

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lobe Sciences are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Lobe Sciences reported solid returns over the last few months and may actually be approaching a breakup point.

Grey Cloak Tech

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Grey Cloak Tech are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Grey Cloak showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lobe Sciences and Grey Cloak

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

The idea behind Lobe Sciences and Grey Cloak Tech 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.