Correlation Between LAKE MATERIALS and Automobile
Can any of the company-specific risk be diversified away by investing in both LAKE MATERIALS and Automobile 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 Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LAKE MATERIALS LTD and Automobile Pc, you can compare the effects of market volatilities on LAKE MATERIALS and Automobile 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 Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAKE MATERIALS and Automobile.
Diversification Opportunities for LAKE MATERIALS and Automobile
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LAKE and Automobile is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding LAKE MATERIALS LTD and Automobile Pc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automobile Pc 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 LTD are associated (or correlated) with Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automobile Pc has no effect on the direction of LAKE MATERIALS i.e., LAKE MATERIALS and Automobile go up and down completely randomly.
Pair Corralation between LAKE MATERIALS and Automobile
Assuming the 90 days trading horizon LAKE MATERIALS LTD is expected to under-perform the Automobile. In addition to that, LAKE MATERIALS is 1.02 times more volatile than Automobile Pc. It trades about -0.18 of its total potential returns per unit of risk. Automobile Pc is currently generating about -0.08 per unit of volatility. If you would invest 73,300 in Automobile Pc on September 26, 2024 and sell it today you would lose (13,500) from holding Automobile Pc or give up 18.42% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
LAKE MATERIALS LTD vs. Automobile Pc
Performance |
Timeline |
LAKE MATERIALS LTD |
Automobile Pc |
LAKE MATERIALS and Automobile Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LAKE MATERIALS and Automobile
The main advantage of trading using opposite LAKE MATERIALS and Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAKE MATERIALS position performs unexpectedly, Automobile 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 Automobile will offset losses from the drop in Automobile's long position.LAKE MATERIALS vs. Samhyun Steel Co | LAKE MATERIALS vs. Wonil Special Steel | LAKE MATERIALS vs. ECSTELECOM Co | LAKE MATERIALS vs. Hankook Steel Co |
Automobile vs. Daejoo Electronic Materials | Automobile vs. Hana Materials | Automobile vs. WONIK Materials CoLtd | Automobile vs. LAKE MATERIALS LTD |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |