Correlation Between Korea Shipbuilding and LAKE MATERIALS
Can any of the company-specific risk be diversified away by investing in both Korea Shipbuilding 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 Korea Shipbuilding and LAKE MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Shipbuilding Offshore and LAKE MATERIALS LTD, you can compare the effects of market volatilities on Korea Shipbuilding 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 Korea Shipbuilding with a short position of LAKE MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Shipbuilding and LAKE MATERIALS.
Diversification Opportunities for Korea Shipbuilding and LAKE MATERIALS
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and LAKE is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Korea Shipbuilding Offshore 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 Korea Shipbuilding 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 Korea Shipbuilding Offshore 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 Korea Shipbuilding i.e., Korea Shipbuilding and LAKE MATERIALS go up and down completely randomly.
Pair Corralation between Korea Shipbuilding and LAKE MATERIALS
Assuming the 90 days trading horizon Korea Shipbuilding Offshore is expected to generate 0.58 times more return on investment than LAKE MATERIALS. However, Korea Shipbuilding Offshore is 1.73 times less risky than LAKE MATERIALS. It trades about 0.11 of its potential returns per unit of risk. LAKE MATERIALS LTD is currently generating about 0.01 per unit of risk. If you would invest 8,410,000 in Korea Shipbuilding Offshore on August 29, 2024 and sell it today you would earn a total of 13,190,000 from holding Korea Shipbuilding Offshore or generate 156.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Shipbuilding Offshore vs. LAKE MATERIALS LTD
Performance |
| Timeline |
| Korea Shipbuilding |
| LAKE MATERIALS LTD |
Korea Shipbuilding and LAKE MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Shipbuilding and LAKE MATERIALS
The main advantage of trading using opposite Korea Shipbuilding and LAKE MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Shipbuilding 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.| Korea Shipbuilding vs. Samsung Electronics Co | Korea Shipbuilding vs. Samsung Electronics Co | Korea Shipbuilding vs. Hyundai Motor Co | Korea Shipbuilding vs. Hyundai Motor |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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