Correlation Between Latham and Intelligent Living

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

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

Diversification Opportunities for Latham and Intelligent Living

-0.5

Correlation Coefficient

Latham  Intelligent Living

Very good diversification

The 3 months correlation between Latham and Intelligent is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Latham Group and Intelligent Living Application in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intelligent Living and Latham 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 Latham Group are associated (or correlated) with Intelligent Living. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intelligent Living has no effect on the direction of Latham i.e., Latham and Intelligent Living go up and down completely randomly.

Pair Corralation between Latham and Intelligent Living

Given the investment horizon of 90 days Latham Group is expected to under-perform the Intelligent Living. But the stock apears to be less risky and, when comparing its historical volatility, Latham Group is 1.61 times less risky than Intelligent Living. The stock trades about -0.2 of its potential returns per unit of risk. The Intelligent Living Application is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Intelligent Living Application on March 28, 2024 and sell it today you would lose (2.00) from holding Intelligent Living Application or give up 4.44% of portfolio value over 90 days.

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

Latham Group  vs.  Intelligent Living Application

Latham Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Latham Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Intelligent Living

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intelligent Living Application has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Intelligent Living is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Latham and Intelligent Living

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

The idea behind Latham Group and Intelligent Living Application 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.