Correlation Between Dongbang Ship and LAKE MATERIALS
Can any of the company-specific risk be diversified away by investing in both Dongbang Ship 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 Dongbang Ship and LAKE MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongbang Ship Machinery and LAKE MATERIALS LTD, you can compare the effects of market volatilities on Dongbang Ship 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 Dongbang Ship with a short position of LAKE MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Ship and LAKE MATERIALS.
Diversification Opportunities for Dongbang Ship and LAKE MATERIALS
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dongbang and LAKE is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Ship Machinery 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 Dongbang Ship 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 Dongbang Ship Machinery 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 Dongbang Ship i.e., Dongbang Ship and LAKE MATERIALS go up and down completely randomly.
Pair Corralation between Dongbang Ship and LAKE MATERIALS
Assuming the 90 days trading horizon Dongbang Ship Machinery is expected to under-perform the LAKE MATERIALS. But the stock apears to be less risky and, when comparing its historical volatility, Dongbang Ship Machinery is 1.67 times less risky than LAKE MATERIALS. The stock trades about -0.17 of its potential returns per unit of risk. The LAKE MATERIALS LTD is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,161,000 in LAKE MATERIALS LTD on October 16, 2024 and sell it today you would earn a total of 15,000 from holding LAKE MATERIALS LTD or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbang Ship Machinery vs. LAKE MATERIALS LTD
Performance |
| Timeline |
| Dongbang Ship Machinery |
| LAKE MATERIALS LTD |
Dongbang Ship and LAKE MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Ship and LAKE MATERIALS
The main advantage of trading using opposite Dongbang Ship and LAKE MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Ship 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.| Dongbang Ship vs. Vitzro Tech Co | Dongbang Ship vs. Orbitech Co | Dongbang Ship vs. RFTech Co | Dongbang Ship vs. A Tech Solution Co |
| LAKE MATERIALS vs. KakaoBank Corp | LAKE MATERIALS vs. Dongil Technology | LAKE MATERIALS vs. Asia Technology Co | LAKE MATERIALS vs. Woori Financial Group |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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