Correlation Between ICD and Lion Chemtech
Can any of the company-specific risk be diversified away by investing in both ICD 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 ICD and Lion Chemtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICD Co and Lion Chemtech Co, you can compare the effects of market volatilities on ICD 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 ICD with a short position of Lion Chemtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICD and Lion Chemtech.
Diversification Opportunities for ICD and Lion Chemtech
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ICD and Lion is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding ICD 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 ICD 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 ICD 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 ICD i.e., ICD and Lion Chemtech go up and down completely randomly.
Pair Corralation between ICD and Lion Chemtech
Assuming the 90 days trading horizon ICD Co is expected to under-perform the Lion Chemtech. In addition to that, ICD is 1.42 times more volatile than Lion Chemtech Co. It trades about -0.07 of its total potential returns per unit of risk. Lion Chemtech Co is currently generating about -0.07 per unit of volatility. If you would invest 348,500 in Lion Chemtech Co on August 29, 2024 and sell it today you would lose (105,000) from holding Lion Chemtech Co or give up 30.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICD Co vs. Lion Chemtech Co
Performance |
| Timeline |
| ICD Co |
| Lion Chemtech |
ICD and Lion Chemtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICD and Lion Chemtech
The main advantage of trading using opposite ICD and Lion Chemtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICD 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.| ICD vs. SFA Engineering | ICD vs. APS Holdings | ICD vs. Soulbrain Holdings Co | ICD vs. JUSUNG ENGINEERING 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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