Correlation Between Korea Information and Lion Chemtech
Can any of the company-specific risk be diversified away by investing in both Korea Information and Lion Chemtech 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 Information and Lion Chemtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Information Communications and Lion Chemtech Co, you can compare the effects of market volatilities on Korea Information and Lion Chemtech 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 Information with a short position of Lion Chemtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Lion Chemtech.
Diversification Opportunities for Korea Information and Lion Chemtech
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Korea and Lion is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Communicatio and Lion Chemtech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Chemtech and Korea Information 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 Information Communications are associated (or correlated) with Lion Chemtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Chemtech has no effect on the direction of Korea Information i.e., Korea Information and Lion Chemtech go up and down completely randomly.
Pair Corralation between Korea Information and Lion Chemtech
Assuming the 90 days trading horizon Korea Information is expected to generate 2.12 times less return on investment than Lion Chemtech. But when comparing it to its historical volatility, Korea Information Communications is 3.5 times less risky than Lion Chemtech. It trades about 0.06 of its potential returns per unit of risk. Lion Chemtech Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 240,000 in Lion Chemtech Co on August 29, 2024 and sell it today you would earn a total of 3,500 from holding Lion Chemtech Co or generate 1.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Communicatio vs. Lion Chemtech Co
Performance |
| Timeline |
| Korea Information |
| Lion Chemtech |
Korea Information and Lion Chemtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Lion Chemtech
The main advantage of trading using opposite Korea Information and Lion Chemtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, Lion Chemtech 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 Lion Chemtech will offset losses from the drop in Lion Chemtech's long position.| Korea Information vs. Daejung Chemicals Metals | Korea Information vs. KyungIn Electronics Co | Korea Information vs. PJ Metal Co | Korea Information vs. Dongwon Metal Co |
| Lion Chemtech vs. CJ Seafood Corp | Lion Chemtech vs. Korea Information Communications | Lion Chemtech vs. Samlip General Foods | Lion Chemtech vs. CKH Food Health |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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