Correlation Between Azek and Lakeland Industries

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

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

Diversification Opportunities for Azek and Lakeland Industries

-0.66

Correlation Coefficient

Azek  Lakeland Industries

Excellent diversification

The 3 months correlation between Azek and Lakeland is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Azek Company and Lakeland Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeland Industries and Azek 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 Azek Company are associated (or correlated) with Lakeland Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeland Industries has no effect on the direction of Azek i.e., Azek and Lakeland Industries go up and down completely randomly.

Pair Corralation between Azek and Lakeland Industries

Given the investment horizon of 90 days Azek Company is expected to generate 0.33 times more return on investment than Lakeland Industries. However, Azek Company is 3.0 times less risky than Lakeland Industries. It trades about 0.2 of its potential returns per unit of risk. Lakeland Industries is currently generating about -0.04 per unit of risk. If you would invest  4,900  in Azek Company on May 7, 2025 and sell it today you would earn a total of  535.00  from holding Azek Company or generate 10.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	62.3%
Values	Daily Returns

Azek Company  vs.  Lakeland Industries

Azek Company

Risk-Adjusted Performance

Good

Over the last 90 days Azek Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite weak technical and fundamental indicators, Azek disclosed solid returns over the last few months and may actually be approaching a breakup point.

Lakeland Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lakeland Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward-looking signals remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Azek and Lakeland Industries

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

The idea behind Azek Company and Lakeland Industries 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.