Correlation Between ReTo Eco and LOCKHEED

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

By analyzing existing cross correlation between ReTo Eco Solutions and LOCKHEED MARTIN P, you can compare the effects of market volatilities on ReTo Eco and LOCKHEED 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 ReTo Eco with a short position of LOCKHEED. Check out your portfolio center. Please also check ongoing floating volatility patterns of ReTo Eco and LOCKHEED.

Diversification Opportunities for ReTo Eco and LOCKHEED

0.19

Correlation Coefficient

ReTo Eco  LOCKHEED

Average diversification

The 3 months correlation between ReTo and LOCKHEED is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding ReTo Eco Solutions and LOCKHEED MARTIN P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOCKHEED MARTIN P and ReTo Eco 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 ReTo Eco Solutions are associated (or correlated) with LOCKHEED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOCKHEED MARTIN P has no effect on the direction of ReTo Eco i.e., ReTo Eco and LOCKHEED go up and down completely randomly.

Pair Corralation between ReTo Eco and LOCKHEED

Given the investment horizon of 90 days ReTo Eco Solutions is expected to under-perform the LOCKHEED. In addition to that, ReTo Eco is 4.11 times more volatile than LOCKHEED MARTIN P. It trades about -0.08 of its total potential returns per unit of risk. LOCKHEED MARTIN P is currently generating about -0.18 per unit of volatility. If you would invest  10,120  in LOCKHEED MARTIN P on September 16, 2024 and sell it today you would lose (889.00) from holding LOCKHEED MARTIN P or give up 8.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	64.62%
Values	Daily Returns

ReTo Eco Solutions  vs.  LOCKHEED MARTIN P

ReTo Eco Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ReTo Eco Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

LOCKHEED MARTIN P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LOCKHEED MARTIN P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for LOCKHEED MARTIN P investors.

Pair Trading with ReTo Eco and LOCKHEED

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

The idea behind ReTo Eco Solutions and LOCKHEED MARTIN P 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.