Correlation Between ES Ceramics and LPI Capital
Can any of the company-specific risk be diversified away by investing in both ES Ceramics and LPI Capital 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 ES Ceramics and LPI Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ES Ceramics Technology and LPI Capital Bhd, you can compare the effects of market volatilities on ES Ceramics and LPI Capital 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 ES Ceramics with a short position of LPI Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of ES Ceramics and LPI Capital.
Diversification Opportunities for ES Ceramics and LPI Capital
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between 0100 and LPI is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding ES Ceramics Technology and LPI Capital Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPI Capital Bhd and ES Ceramics 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 ES Ceramics Technology are associated (or correlated) with LPI Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPI Capital Bhd has no effect on the direction of ES Ceramics i.e., ES Ceramics and LPI Capital go up and down completely randomly.
Pair Corralation between ES Ceramics and LPI Capital
Assuming the 90 days trading horizon ES Ceramics Technology is expected to under-perform the LPI Capital. In addition to that, ES Ceramics is 5.54 times more volatile than LPI Capital Bhd. It trades about 0.0 of its total potential returns per unit of risk. LPI Capital Bhd is currently generating about 0.08 per unit of volatility. If you would invest 1,078 in LPI Capital Bhd on September 4, 2024 and sell it today you would earn a total of 250.00 from holding LPI Capital Bhd or generate 23.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
ES Ceramics Technology vs. LPI Capital Bhd
Performance |
| Timeline |
| ES Ceramics Technology |
| LPI Capital Bhd |
ES Ceramics and LPI Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ES Ceramics and LPI Capital
The main advantage of trading using opposite ES Ceramics and LPI Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ES Ceramics position performs unexpectedly, LPI Capital 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 LPI Capital will offset losses from the drop in LPI Capital's long position.| ES Ceramics vs. Minetech Resources Bhd | ES Ceramics vs. Swift Haulage Bhd | ES Ceramics vs. Insas Bhd | ES Ceramics vs. Bina Darulaman Bhd |
| LPI Capital vs. Lotte Chemical Titan | LPI Capital vs. YX Precious Metals | LPI Capital vs. Sunway Construction Group | LPI Capital vs. Mycron Steel Bhd |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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