Correlation Between Lion Chemtech and Naver
Can any of the company-specific risk be diversified away by investing in both Lion Chemtech and Naver 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 Lion Chemtech and Naver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Chemtech Co and Naver, you can compare the effects of market volatilities on Lion Chemtech and Naver 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 Lion Chemtech with a short position of Naver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Chemtech and Naver.
Diversification Opportunities for Lion Chemtech and Naver
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lion and Naver is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lion Chemtech Co and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver and Lion Chemtech 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 Lion Chemtech Co are associated (or correlated) with Naver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naver has no effect on the direction of Lion Chemtech i.e., Lion Chemtech and Naver go up and down completely randomly.
Pair Corralation between Lion Chemtech and Naver
Assuming the 90 days trading horizon Lion Chemtech Co is expected to generate 2.0 times more return on investment than Naver. However, Lion Chemtech is 2.0 times more volatile than Naver. It trades about 0.19 of its potential returns per unit of risk. Naver is currently generating about 0.0 per unit of risk. If you would invest 216,124 in Lion Chemtech Co on October 8, 2024 and sell it today you would earn a total of 34,876 from holding Lion Chemtech Co or generate 16.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lion Chemtech Co vs. Naver
Performance |
Timeline |
Lion Chemtech |
Naver |
Lion Chemtech and Naver Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lion Chemtech and Naver
The main advantage of trading using opposite Lion Chemtech and Naver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Chemtech position performs unexpectedly, Naver 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 Naver will offset losses from the drop in Naver's long position.Lion Chemtech vs. PNC Technologies co | Lion Chemtech vs. Hanwha Life Insurance | Lion Chemtech vs. Osang Healthcare Co,Ltd | Lion Chemtech vs. iNtRON Biotechnology |
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Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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