Correlation Between ABCO Electronics and Lion Chemtech
Can any of the company-specific risk be diversified away by investing in both ABCO Electronics 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 ABCO Electronics and Lion Chemtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABCO Electronics Co and Lion Chemtech Co, you can compare the effects of market volatilities on ABCO Electronics 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 ABCO Electronics with a short position of Lion Chemtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABCO Electronics and Lion Chemtech.
Diversification Opportunities for ABCO Electronics and Lion Chemtech
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ABCO and Lion is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding ABCO Electronics Co and Lion Chemtech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Chemtech and ABCO Electronics 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 ABCO Electronics Co 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 ABCO Electronics i.e., ABCO Electronics and Lion Chemtech go up and down completely randomly.
Pair Corralation between ABCO Electronics and Lion Chemtech
Assuming the 90 days trading horizon ABCO Electronics Co is expected to under-perform the Lion Chemtech. But the stock apears to be less risky and, when comparing its historical volatility, ABCO Electronics Co is 1.07 times less risky than Lion Chemtech. The stock trades about -0.12 of its potential returns per unit of risk. The 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 |
ABCO Electronics Co vs. Lion Chemtech Co
Performance |
| Timeline |
| ABCO Electronics |
| Lion Chemtech |
ABCO Electronics and Lion Chemtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABCO Electronics and Lion Chemtech
The main advantage of trading using opposite ABCO Electronics and Lion Chemtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABCO Electronics 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.| ABCO Electronics vs. Korea Real Estate | ABCO Electronics vs. Korea Ratings Co | ABCO Electronics vs. IQuest Co | ABCO Electronics vs. Wonbang Tech Co |
| Lion Chemtech vs. Moonbae Steel | Lion Chemtech vs. Fine Besteel Co | Lion Chemtech vs. J Steel Co | Lion Chemtech vs. DONGKUK STEEL MILL |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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