Correlation Between Formetal and Lee Ku
Can any of the company-specific risk be diversified away by investing in both Formetal and Lee Ku 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 Formetal and Lee Ku into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formetal Co and Lee Ku Industrial, you can compare the effects of market volatilities on Formetal and Lee Ku 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 Formetal with a short position of Lee Ku. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formetal and Lee Ku.
Diversification Opportunities for Formetal and Lee Ku
Modest diversification
The 3 months correlation between Formetal and Lee is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Formetal Co and Lee Ku Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lee Ku Industrial and Formetal 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 Formetal Co are associated (or correlated) with Lee Ku. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lee Ku Industrial has no effect on the direction of Formetal i.e., Formetal and Lee Ku go up and down completely randomly.
Pair Corralation between Formetal and Lee Ku
Assuming the 90 days trading horizon Formetal Co is expected to generate 1.56 times more return on investment than Lee Ku. However, Formetal is 1.56 times more volatile than Lee Ku Industrial. It trades about 0.22 of its potential returns per unit of risk. Lee Ku Industrial is currently generating about 0.13 per unit of risk. If you would invest 338,000 in Formetal Co on November 1, 2024 and sell it today you would earn a total of 42,500 from holding Formetal Co or generate 12.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formetal Co vs. Lee Ku Industrial
Performance |
| Timeline |
| Formetal |
| Lee Ku Industrial |
Formetal and Lee Ku Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formetal and Lee Ku
The main advantage of trading using opposite Formetal and Lee Ku positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formetal position performs unexpectedly, Lee Ku 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 Lee Ku will offset losses from the drop in Lee Ku's long position.| Formetal vs. Puloon Technology | Formetal vs. Display Tech Co | Formetal vs. Alton Sports CoLtd | Formetal vs. PlayD Co |
| Lee Ku vs. Jeju Air Co | Lee Ku vs. PJ Metal Co | Lee Ku vs. Guyoung Technology Co | Lee Ku vs. Duksan Hi Metal |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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