Correlation Between Simclar and LGL

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

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

Diversification Opportunities for Simclar and LGL

-0.16

Correlation Coefficient

Simclar  LGL

Good diversification

The 3 months correlation between Simclar and LGL is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Simclar and LGL Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LGL Group and Simclar 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 Simclar are associated (or correlated) with LGL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LGL Group has no effect on the direction of Simclar i.e., Simclar and LGL go up and down completely randomly.

Pair Corralation between Simclar and LGL

Given the investment horizon of 90 days Simclar is expected to generate 5.31 times more return on investment than LGL. However, Simclar is 5.31 times more volatile than LGL Group. It trades about 0.06 of its potential returns per unit of risk. LGL Group is currently generating about 0.05 per unit of risk. If you would invest  0.02  in Simclar on May 12, 2025 and sell it today you would earn a total of  0.00  from holding Simclar or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.3%
Values	Daily Returns

Simclar  vs.  LGL Group

Simclar

Risk-Adjusted Performance

Soft

Over the last 90 days Simclar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather weak primary indicators, Simclar exhibited solid returns over the last few months and may actually be approaching a breakup point.

LGL Group

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in LGL Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, LGL may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Simclar and LGL

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

The idea behind Simclar and LGL Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.