Correlation Between Cheryong Industrial and Lion Chemtech
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial and Lion Chemtech 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 Cheryong Industrial and Lion Chemtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheryong Industrial CoLtd and Lion Chemtech Co, you can compare the effects of market volatilities on Cheryong Industrial and Lion Chemtech 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 Cheryong Industrial with a short position of Lion Chemtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and Lion Chemtech.
Diversification Opportunities for Cheryong Industrial and Lion Chemtech
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cheryong and Lion is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and Lion Chemtech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Chemtech and Cheryong Industrial 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 Cheryong Industrial CoLtd are associated (or correlated) with Lion Chemtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Chemtech has no effect on the direction of Cheryong Industrial i.e., Cheryong Industrial and Lion Chemtech go up and down completely randomly.
Pair Corralation between Cheryong Industrial and Lion Chemtech
Assuming the 90 days trading horizon Cheryong Industrial is expected to generate 1.65 times less return on investment than Lion Chemtech. In addition to that, Cheryong Industrial is 1.35 times more volatile than Lion Chemtech Co. It trades about 0.03 of its total potential returns per unit of risk. Lion Chemtech Co is currently generating about 0.07 per unit of volatility. If you would invest 209,838 in Lion Chemtech Co on November 2, 2024 and sell it today you would earn a total of 37,162 from holding Lion Chemtech Co or generate 17.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. Lion Chemtech Co
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| Lion Chemtech |
Cheryong Industrial and Lion Chemtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and Lion Chemtech
The main advantage of trading using opposite Cheryong Industrial and Lion Chemtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial position performs unexpectedly, Lion Chemtech 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 Lion Chemtech will offset losses from the drop in Lion Chemtech's long position.| Cheryong Industrial vs. Grand Korea Leisure | Cheryong Industrial vs. Dongkuk Structures Construction | Cheryong Industrial vs. Tuksu Engineering ConstructionLtd | Cheryong Industrial vs. SK Telecom Co |
| Lion Chemtech vs. Dongnam Chemical Co | Lion Chemtech vs. Hanjoo Light Metal | Lion Chemtech vs. Kbi Metal Co | Lion Chemtech vs. Daewon Chemical Co |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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