Correlation Between Lakeland Industries and Concord New

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

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

Diversification Opportunities for Lakeland Industries and Concord New

0.77

Correlation Coefficient

Lakeland Industries  Concord New

Poor diversification

The 3 months correlation between Lakeland and Concord is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Lakeland Industries and Concord New Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concord New Energy 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 Concord New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concord New Energy has no effect on the direction of Lakeland Industries i.e., Lakeland Industries and Concord New go up and down completely randomly.

Pair Corralation between Lakeland Industries and Concord New

Given the investment horizon of 90 days Lakeland Industries is expected to generate 3.36 times less return on investment than Concord New. But when comparing it to its historical volatility, Lakeland Industries is 2.55 times less risky than Concord New. It trades about 0.07 of its potential returns per unit of risk. Concord New Energy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3.77  in Concord New Energy on March 28, 2024 and sell it today you would earn a total of  2.93  from holding Concord New Energy or generate 77.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.05%
Values	Daily Returns

Lakeland Industries  vs.  Concord New Energy

Lakeland Industries

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lakeland Industries are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking signals, Lakeland Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Concord New Energy

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Concord New Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Concord New reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lakeland Industries and Concord New

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

The idea behind Lakeland Industries and Concord New Energy 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.