Correlation Between LEENO Industrial and Korea Environment
Can any of the company-specific risk be diversified away by investing in both LEENO Industrial and Korea Environment 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 LEENO Industrial and Korea Environment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LEENO Industrial and Korea Environment Technology, you can compare the effects of market volatilities on LEENO Industrial and Korea Environment 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 LEENO Industrial with a short position of Korea Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEENO Industrial and Korea Environment.
Diversification Opportunities for LEENO Industrial and Korea Environment
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LEENO and Korea is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding LEENO Industrial and Korea Environment Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Environment and LEENO Industrial 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 LEENO Industrial are associated (or correlated) with Korea Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Environment has no effect on the direction of LEENO Industrial i.e., LEENO Industrial and Korea Environment go up and down completely randomly.
Pair Corralation between LEENO Industrial and Korea Environment
Assuming the 90 days trading horizon LEENO Industrial is expected to generate 9.55 times more return on investment than Korea Environment. However, LEENO Industrial is 9.55 times more volatile than Korea Environment Technology. It trades about -0.05 of its potential returns per unit of risk. Korea Environment Technology is currently generating about -0.45 per unit of risk. If you would invest 20,900,000 in LEENO Industrial on November 7, 2024 and sell it today you would lose (650,000) from holding LEENO Industrial or give up 3.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LEENO Industrial vs. Korea Environment Technology
Performance |
| Timeline |
| LEENO Industrial |
| Korea Environment |
LEENO Industrial and Korea Environment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEENO Industrial and Korea Environment
The main advantage of trading using opposite LEENO Industrial and Korea Environment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEENO Industrial position performs unexpectedly, Korea Environment 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 Korea Environment will offset losses from the drop in Korea Environment's long position.| LEENO Industrial vs. Tokai Carbon Korea | LEENO Industrial vs. LF Co | LEENO Industrial vs. Koh Young Technology |
| Korea Environment vs. INSUN Environmental New | Korea Environment vs. LEENO Industrial | Korea Environment vs. Kmw Inc | Korea Environment vs. NICE Information Service |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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