Correlation Between Lucky Cement and Southeast Cement
Can any of the company-specific risk be diversified away by investing in both Lucky Cement and Southeast Cement 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 Lucky Cement and Southeast Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lucky Cement Co and Southeast Cement Co, you can compare the effects of market volatilities on Lucky Cement and Southeast Cement 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 Lucky Cement with a short position of Southeast Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucky Cement and Southeast Cement.
Diversification Opportunities for Lucky Cement and Southeast Cement
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lucky and Southeast is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Lucky Cement Co and Southeast Cement Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southeast Cement and Lucky Cement 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 Lucky Cement Co are associated (or correlated) with Southeast Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southeast Cement has no effect on the direction of Lucky Cement i.e., Lucky Cement and Southeast Cement go up and down completely randomly.
Pair Corralation between Lucky Cement and Southeast Cement
Assuming the 90 days trading horizon Lucky Cement Co is expected to generate 1.07 times more return on investment than Southeast Cement. However, Lucky Cement is 1.07 times more volatile than Southeast Cement Co. It trades about 0.04 of its potential returns per unit of risk. Southeast Cement Co is currently generating about 0.03 per unit of risk. If you would invest 1,110 in Lucky Cement Co on September 3, 2024 and sell it today you would earn a total of 335.00 from holding Lucky Cement Co or generate 30.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Lucky Cement Co vs. Southeast Cement Co
Performance |
| Timeline |
| Lucky Cement |
| Southeast Cement |
Lucky Cement and Southeast Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lucky Cement and Southeast Cement
The main advantage of trading using opposite Lucky Cement and Southeast Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lucky Cement position performs unexpectedly, Southeast Cement 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 Southeast Cement will offset losses from the drop in Southeast Cement's long position.The idea behind Lucky Cement Co and Southeast Cement Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Southeast Cement vs. Chia Hsin Cement | Southeast Cement vs. Lucky Cement Co | Southeast Cement vs. Hsing Ta Cement | Southeast Cement vs. Universal Cement Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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