Correlation Between Innowireless and LAKE MATERIALS
Can any of the company-specific risk be diversified away by investing in both Innowireless 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 Innowireless and LAKE MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innowireless Co and LAKE MATERIALS LTD, you can compare the effects of market volatilities on Innowireless 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 Innowireless with a short position of LAKE MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innowireless and LAKE MATERIALS.
Diversification Opportunities for Innowireless and LAKE MATERIALS
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Innowireless and LAKE is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Innowireless Co and LAKE MATERIALS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAKE MATERIALS LTD and Innowireless 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 Innowireless 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 LTD has no effect on the direction of Innowireless i.e., Innowireless and LAKE MATERIALS go up and down completely randomly.
Pair Corralation between Innowireless and LAKE MATERIALS
Assuming the 90 days trading horizon Innowireless Co is expected to generate 0.61 times more return on investment than LAKE MATERIALS. However, Innowireless Co is 1.65 times less risky than LAKE MATERIALS. It trades about 0.17 of its potential returns per unit of risk. LAKE MATERIALS LTD is currently generating about -0.28 per unit of risk. If you would invest 1,736,000 in Innowireless Co on September 1, 2024 and sell it today you would earn a total of 128,000 from holding Innowireless Co or generate 7.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innowireless Co vs. LAKE MATERIALS LTD
Performance |
| Timeline |
| Innowireless |
| LAKE MATERIALS LTD |
Innowireless and LAKE MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innowireless and LAKE MATERIALS
The main advantage of trading using opposite Innowireless and LAKE MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innowireless 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's long position.| Innowireless vs. LG Chemicals | Innowireless vs. Sung Bo Chemicals | Innowireless vs. Lotte Non Life Insurance | Innowireless vs. JC Chemical Co |
| 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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