Correlation Between Loop Industries and Coroware

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

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

Diversification Opportunities for Loop Industries and Coroware

-0.15

Correlation Coefficient

Loop Industries  Coroware

Good diversification

The 3 months correlation between Loop and Coroware is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Loop Industries and Coroware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coroware and Loop 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 Loop Industries are associated (or correlated) with Coroware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coroware has no effect on the direction of Loop Industries i.e., Loop Industries and Coroware go up and down completely randomly.

Pair Corralation between Loop Industries and Coroware

Given the investment horizon of 90 days Loop Industries is expected to under-perform the Coroware. But the stock apears to be less risky and, when comparing its historical volatility, Loop Industries is 70.39 times less risky than Coroware. The stock trades about -0.02 of its potential returns per unit of risk. The Coroware is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Coroware on September 14, 2024 and sell it today you would lose (0.01) from holding Coroware or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Loop Industries  vs.  Coroware

Loop Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loop Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest conflicting performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Coroware

Risk-Adjusted Performance

30 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Coroware are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Coroware demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Loop Industries and Coroware

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

The idea behind Loop Industries and Coroware 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.