Correlation Between Namhae Chemical and Lake Materials
Can any of the company-specific risk be diversified away by investing in both Namhae Chemical 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 Namhae Chemical and Lake Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namhae Chemical and Lake Materials Co, you can compare the effects of market volatilities on Namhae Chemical 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 Namhae Chemical with a short position of Lake Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhae Chemical and Lake Materials.
Diversification Opportunities for Namhae Chemical and Lake Materials
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Namhae and Lake is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Namhae Chemical and Lake Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Materials and Namhae Chemical 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 Namhae Chemical 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 has no effect on the direction of Namhae Chemical i.e., Namhae Chemical and Lake Materials go up and down completely randomly.
Pair Corralation between Namhae Chemical and Lake Materials
Assuming the 90 days trading horizon Namhae Chemical is expected to generate 0.23 times more return on investment than Lake Materials. However, Namhae Chemical is 4.29 times less risky than Lake Materials. It trades about 0.07 of its potential returns per unit of risk. Lake Materials Co is currently generating about -0.18 per unit of risk. If you would invest 630,000 in Namhae Chemical on November 7, 2024 and sell it today you would earn a total of 6,000 from holding Namhae Chemical or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Namhae Chemical vs. Lake Materials Co
Performance |
| Timeline |
| Namhae Chemical |
| Lake Materials |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Namhae Chemical and Lake Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhae Chemical and Lake Materials
The main advantage of trading using opposite Namhae Chemical and Lake Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhae Chemical 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' long position.| Namhae Chemical vs. Neungyule Education | Namhae Chemical vs. Asia Technology Co | Namhae Chemical vs. NewFlex Technology Co | Namhae Chemical vs. Eagle Veterinary Technology |
| Lake Materials vs. Yura Tech Co | Lake Materials vs. Vina Technology Co | Lake Materials vs. Eagle Veterinary Technology | Lake Materials vs. Narae Nanotech Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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