Correlation Between National Plastic and LAKE MATERIALS
Can any of the company-specific risk be diversified away by investing in both National Plastic and LAKE 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 National Plastic and LAKE MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Plastic Co and LAKE MATERIALS LTD, you can compare the effects of market volatilities on National Plastic and LAKE 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 National Plastic with a short position of LAKE MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Plastic and LAKE MATERIALS.
Diversification Opportunities for National Plastic and LAKE MATERIALS
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and LAKE is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding National Plastic Co and LAKE MATERIALS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAKE MATERIALS LTD and National Plastic 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 National Plastic Co are associated (or correlated) with LAKE MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAKE MATERIALS LTD has no effect on the direction of National Plastic i.e., National Plastic and LAKE MATERIALS go up and down completely randomly.
Pair Corralation between National Plastic and LAKE MATERIALS
Assuming the 90 days trading horizon National Plastic Co is expected to under-perform the LAKE MATERIALS. But the stock apears to be less risky and, when comparing its historical volatility, National Plastic Co is 3.33 times less risky than LAKE MATERIALS. The stock trades about -0.04 of its potential returns per unit of risk. The LAKE MATERIALS LTD is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,735,000 in LAKE MATERIALS LTD on September 4, 2024 and sell it today you would lose (579,000) from holding LAKE MATERIALS LTD or give up 33.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Plastic Co vs. LAKE MATERIALS LTD
Performance |
| Timeline |
| National Plastic |
| LAKE MATERIALS LTD |
National Plastic and LAKE MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Plastic and LAKE MATERIALS
The main advantage of trading using opposite National Plastic and LAKE MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Plastic position performs unexpectedly, LAKE 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 LAKE MATERIALS will offset losses from the drop in LAKE MATERIALS's long position.| National Plastic vs. LG Uplus | National Plastic vs. ASTORY CoLtd | National Plastic vs. Industrial Bank | National Plastic vs. AnterogenCoLtd |
| LAKE MATERIALS vs. Samsung Electronics Co | LAKE MATERIALS vs. Samsung Electronics Co | LAKE MATERIALS vs. LG Energy Solution | LAKE MATERIALS vs. SK Hynix |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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