Correlation Between Lee Ku and Formetal
Can any of the company-specific risk be diversified away by investing in both Lee Ku and Formetal 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 Lee Ku and Formetal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lee Ku Industrial and Formetal Co, you can compare the effects of market volatilities on Lee Ku and Formetal 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 Lee Ku with a short position of Formetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lee Ku and Formetal.
Diversification Opportunities for Lee Ku and Formetal
Weak diversification
The 3 months correlation between Lee and Formetal is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lee Ku Industrial and Formetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formetal and Lee Ku 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 Lee Ku Industrial are associated (or correlated) with Formetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formetal has no effect on the direction of Lee Ku i.e., Lee Ku and Formetal go up and down completely randomly.
Pair Corralation between Lee Ku and Formetal
Assuming the 90 days trading horizon Lee Ku is expected to generate 5.97 times less return on investment than Formetal. But when comparing it to its historical volatility, Lee Ku Industrial is 2.05 times less risky than Formetal. It trades about 0.08 of its potential returns per unit of risk. Formetal Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 344,000 in Formetal Co on November 8, 2024 and sell it today you would earn a total of 65,000 from holding Formetal Co or generate 18.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lee Ku Industrial vs. Formetal Co
Performance |
| Timeline |
| Lee Ku Industrial |
| Formetal |
Lee Ku and Formetal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lee Ku and Formetal
The main advantage of trading using opposite Lee Ku and Formetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lee Ku position performs unexpectedly, Formetal 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 Formetal will offset losses from the drop in Formetal's long position.| Lee Ku vs. Daol Investment Securities | Lee Ku vs. Golden Bridge Investment | Lee Ku vs. Daejung Chemicals Metals | Lee Ku vs. Formetal Co |
| Formetal vs. GS Retail Co | Formetal vs. Kisan Telecom Co | Formetal vs. Digital Imaging Technology | Formetal vs. Puloon Technology |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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