Correlation Between RFTech and Lake Materials
Can any of the company-specific risk be diversified away by investing in both RFTech 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 RFTech and Lake Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RFTech Co and Lake Materials Co, you can compare the effects of market volatilities on RFTech 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 RFTech with a short position of Lake Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of RFTech and Lake Materials.
Diversification Opportunities for RFTech and Lake Materials
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RFTech and Lake is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding RFTech Co and Lake Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lake Materials and RFTech 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 RFTech Co 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 RFTech i.e., RFTech and Lake Materials go up and down completely randomly.
Pair Corralation between RFTech and Lake Materials
Assuming the 90 days trading horizon RFTech Co is expected to generate 0.54 times more return on investment than Lake Materials. However, RFTech Co is 1.85 times less risky than Lake Materials. It trades about 0.34 of its potential returns per unit of risk. Lake Materials Co is currently generating about -0.15 per unit of risk. If you would invest 289,000 in RFTech Co on August 29, 2024 and sell it today you would earn a total of 41,500 from holding RFTech Co or generate 14.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RFTech Co vs. Lake Materials Co
Performance |
| Timeline |
| RFTech |
| Lake Materials |
RFTech and Lake Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RFTech and Lake Materials
The main advantage of trading using opposite RFTech and Lake Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RFTech 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.| RFTech vs. Daou Technology | RFTech vs. Ssangyong Information Communication | RFTech vs. Digital Power Communications | RFTech vs. Sangsin Energy Display |
| Lake Materials vs. Samsung Electronics Co | Lake Materials vs. Samsung Electronics Co | Lake Materials vs. LG Energy Solution | Lake Materials vs. SK Hynix |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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