Correlation Between Lockheed Martin and SANOK RUBBER

Can any of the company-specific risk be diversified away by investing in both Lockheed Martin and SANOK RUBBER 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 Lockheed Martin and SANOK RUBBER into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lockheed Martin and SANOK RUBBER ZY, you can compare the effects of market volatilities on Lockheed Martin and SANOK RUBBER 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 Lockheed Martin with a short position of SANOK RUBBER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lockheed Martin and SANOK RUBBER.

Diversification Opportunities for Lockheed Martin and SANOK RUBBER

0.23

Correlation Coefficient

Lockheed Martin  SANOK RUBBER

Modest diversification

The 3 months correlation between Lockheed and SANOK is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Lockheed Martin and SANOK RUBBER ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANOK RUBBER ZY and Lockheed Martin 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 Lockheed Martin are associated (or correlated) with SANOK RUBBER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANOK RUBBER ZY has no effect on the direction of Lockheed Martin i.e., Lockheed Martin and SANOK RUBBER go up and down completely randomly.

Pair Corralation between Lockheed Martin and SANOK RUBBER

Assuming the 90 days horizon Lockheed Martin is expected to under-perform the SANOK RUBBER. But the stock apears to be less risky and, when comparing its historical volatility, Lockheed Martin is 2.3 times less risky than SANOK RUBBER. The stock trades about -0.07 of its potential returns per unit of risk. The SANOK RUBBER ZY is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  353.00  in SANOK RUBBER ZY on September 17, 2024 and sell it today you would earn a total of  99.00  from holding SANOK RUBBER ZY or generate 28.05% return on investment over 90 days.

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

Lockheed Martin  vs.  SANOK RUBBER ZY

Lockheed Martin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lockheed Martin has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SANOK RUBBER ZY

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SANOK RUBBER ZY are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SANOK RUBBER reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lockheed Martin and SANOK RUBBER

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

The idea behind Lockheed Martin and SANOK RUBBER ZY 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.