Correlation Between Automobile and LAKE MATERIALS
Can any of the company-specific risk be diversified away by investing in both Automobile 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 Automobile and LAKE MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and LAKE MATERIALS LTD, you can compare the effects of market volatilities on Automobile 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 Automobile with a short position of LAKE MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and LAKE MATERIALS.
Diversification Opportunities for Automobile and LAKE MATERIALS
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Automobile and LAKE is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc 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 Automobile 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 Automobile Pc 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 Automobile i.e., Automobile and LAKE MATERIALS go up and down completely randomly.
Pair Corralation between Automobile and LAKE MATERIALS
Assuming the 90 days trading horizon Automobile Pc is expected to generate 1.37 times more return on investment than LAKE MATERIALS. However, Automobile is 1.37 times more volatile than LAKE MATERIALS LTD. It trades about 0.0 of its potential returns per unit of risk. LAKE MATERIALS LTD is currently generating about -0.28 per unit of risk. If you would invest 69,300 in Automobile Pc on September 1, 2024 and sell it today you would lose (1,300) from holding Automobile Pc or give up 1.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automobile Pc vs. LAKE MATERIALS LTD
Performance |
| Timeline |
| Automobile Pc |
| LAKE MATERIALS LTD |
Automobile and LAKE MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and LAKE MATERIALS
The main advantage of trading using opposite Automobile and LAKE MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile 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.| Automobile vs. Miwon Chemical | Automobile vs. Sung Bo Chemicals | Automobile vs. Chin Yang Chemical | Automobile vs. Daehan Synthetic Fiber |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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