Correlation Between Kolon Plastics and LS Materials
Can any of the company-specific risk be diversified away by investing in both Kolon Plastics and LS 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 Kolon Plastics and LS Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kolon Plastics and LS Materials, you can compare the effects of market volatilities on Kolon Plastics and LS 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 Kolon Plastics with a short position of LS Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kolon Plastics and LS Materials.
Diversification Opportunities for Kolon Plastics and LS Materials
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kolon and 417200 is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Kolon Plastics and LS Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LS Materials and Kolon Plastics 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 Kolon Plastics are associated (or correlated) with LS Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LS Materials has no effect on the direction of Kolon Plastics i.e., Kolon Plastics and LS Materials go up and down completely randomly.
Pair Corralation between Kolon Plastics and LS Materials
Assuming the 90 days trading horizon Kolon Plastics is expected to under-perform the LS Materials. But the stock apears to be less risky and, when comparing its historical volatility, Kolon Plastics is 1.78 times less risky than LS Materials. The stock trades about 0.0 of its potential returns per unit of risk. The LS Materials is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,530,000 in LS Materials on October 24, 2024 and sell it today you would lose (49,000) from holding LS Materials or give up 3.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kolon Plastics vs. LS Materials
Performance |
| Timeline |
| Kolon Plastics |
| LS Materials |
Kolon Plastics and LS Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kolon Plastics and LS Materials
The main advantage of trading using opposite Kolon Plastics and LS Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kolon Plastics position performs unexpectedly, LS 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 LS Materials will offset losses from the drop in LS Materials' long position.| Kolon Plastics vs. AptaBio Therapeutics | Kolon Plastics vs. Daewoo SBI SPAC | Kolon Plastics vs. Dream Security co | Kolon Plastics vs. Microfriend |
| LS Materials vs. Samsung Electronics Co | LS Materials vs. Samsung Electronics Co | LS Materials vs. LG Energy Solution | LS 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 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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