Correlation Between Lake Materials and WONIK Materials
Can any of the company-specific risk be diversified away by investing in both Lake Materials and WONIK Materials 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 Lake Materials and WONIK Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lake Materials Co and WONIK Materials CoLtd, you can compare the effects of market volatilities on Lake Materials and WONIK Materials 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 Lake Materials with a short position of WONIK Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Materials and WONIK Materials.
Diversification Opportunities for Lake Materials and WONIK Materials
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lake and WONIK is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Lake Materials Co and WONIK Materials CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WONIK Materials CoLtd and Lake Materials 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 Lake Materials Co are associated (or correlated) with WONIK Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WONIK Materials CoLtd has no effect on the direction of Lake Materials i.e., Lake Materials and WONIK Materials go up and down completely randomly.
Pair Corralation between Lake Materials and WONIK Materials
Assuming the 90 days trading horizon Lake Materials Co is expected to generate 1.65 times more return on investment than WONIK Materials. However, Lake Materials is 1.65 times more volatile than WONIK Materials CoLtd. It trades about 0.36 of its potential returns per unit of risk. WONIK Materials CoLtd is currently generating about 0.14 per unit of risk. If you would invest 1,058,000 in Lake Materials Co on December 4, 2024 and sell it today you would earn a total of 630,000 from holding Lake Materials Co or generate 59.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 95.45% |
Values | Daily Returns |
Lake Materials Co vs. WONIK Materials CoLtd
Performance |
Timeline |
Lake Materials |
WONIK Materials CoLtd |
Lake Materials and WONIK Materials Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lake Materials and WONIK Materials
The main advantage of trading using opposite Lake Materials and WONIK Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Materials position performs unexpectedly, WONIK Materials 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 WONIK Materials will offset losses from the drop in WONIK Materials' long position.Lake Materials vs. Sam Yang Foods | Lake Materials vs. Tuksu Engineering ConstructionLtd | Lake Materials vs. Samlip General Foods | Lake Materials vs. ENERGYMACHINERY KOREA CoLtd |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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