Correlation Between LAKE MATERIALS and Chinyang Hold
Can any of the company-specific risk be diversified away by investing in both LAKE MATERIALS and Chinyang Hold 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 Chinyang Hold 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 Chinyang Hold, you can compare the effects of market volatilities on LAKE MATERIALS and Chinyang Hold 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 Chinyang Hold. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAKE MATERIALS and Chinyang Hold.
Diversification Opportunities for LAKE MATERIALS and Chinyang Hold
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LAKE and Chinyang is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding LAKE MATERIALS LTD and Chinyang Hold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chinyang Hold 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 Chinyang Hold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chinyang Hold has no effect on the direction of LAKE MATERIALS i.e., LAKE MATERIALS and Chinyang Hold go up and down completely randomly.
Pair Corralation between LAKE MATERIALS and Chinyang Hold
Assuming the 90 days trading horizon LAKE MATERIALS LTD is expected to generate 5.81 times more return on investment than Chinyang Hold. However, LAKE MATERIALS is 5.81 times more volatile than Chinyang Hold. It trades about 0.06 of its potential returns per unit of risk. Chinyang Hold is currently generating about 0.04 per unit of risk. If you would invest 439,500 in LAKE MATERIALS LTD on September 24, 2024 and sell it today you would earn a total of 639,500 from holding LAKE MATERIALS LTD or generate 145.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
LAKE MATERIALS LTD vs. Chinyang Hold
Performance |
Timeline |
LAKE MATERIALS LTD |
Chinyang Hold |
LAKE MATERIALS and Chinyang Hold Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LAKE MATERIALS and Chinyang Hold
The main advantage of trading using opposite LAKE MATERIALS and Chinyang Hold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAKE MATERIALS position performs unexpectedly, Chinyang Hold 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 Chinyang Hold will offset losses from the drop in Chinyang Hold's long position.LAKE MATERIALS vs. Top Material Co | LAKE MATERIALS vs. Aprogen Healthcare Games | LAKE MATERIALS vs. Iljin Display | LAKE MATERIALS vs. Ecoplastic |
Chinyang Hold vs. Hyosung Advanced Materials | Chinyang Hold vs. Dongbang Ship Machinery | Chinyang Hold vs. LAKE MATERIALS LTD | Chinyang Hold vs. Semyung Electric Machinery |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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