Correlation Between Taewoong Logistics and Lion Chemtech

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

By analyzing existing cross correlation between Taewoong Logistics CoLtd and Lion Chemtech Co, you can compare the effects of market volatilities on Taewoong Logistics and Lion Chemtech 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 Taewoong Logistics with a short position of Lion Chemtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taewoong Logistics and Lion Chemtech.

Diversification Opportunities for Taewoong Logistics and Lion Chemtech

0.07

Correlation Coefficient

Taewoong Logistics  Lion Chemtech

Significant diversification

The 3 months correlation between Taewoong and Lion is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Taewoong Logistics CoLtd and Lion Chemtech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Chemtech and Taewoong Logistics 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 Taewoong Logistics CoLtd are associated (or correlated) with Lion Chemtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Chemtech has no effect on the direction of Taewoong Logistics i.e., Taewoong Logistics and Lion Chemtech go up and down completely randomly.

Pair Corralation between Taewoong Logistics and Lion Chemtech

Assuming the 90 days trading horizon Taewoong Logistics CoLtd is expected to generate 0.33 times more return on investment than Lion Chemtech. However, Taewoong Logistics CoLtd is 3.01 times less risky than Lion Chemtech. It trades about 0.06 of its potential returns per unit of risk. Lion Chemtech Co is currently generating about -0.23 per unit of risk. If you would invest  287,464  in Taewoong Logistics CoLtd on October 22, 2024 and sell it today you would earn a total of  3,036  from holding Taewoong Logistics CoLtd or generate 1.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Taewoong Logistics CoLtd  vs.  Lion Chemtech Co

Taewoong Logistics CoLtd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Taewoong Logistics CoLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Taewoong Logistics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Lion Chemtech

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lion Chemtech Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lion Chemtech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Taewoong Logistics and Lion Chemtech

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

The idea behind Taewoong Logistics CoLtd and Lion Chemtech Co 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.