Correlation Between Lion Chemtech and Korean Reinsurance
Can any of the company-specific risk be diversified away by investing in both Lion Chemtech and Korean Reinsurance 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 Lion Chemtech and Korean Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Chemtech Co and Korean Reinsurance Co, you can compare the effects of market volatilities on Lion Chemtech and Korean Reinsurance 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 Lion Chemtech with a short position of Korean Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Chemtech and Korean Reinsurance.
Diversification Opportunities for Lion Chemtech and Korean Reinsurance
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lion and Korean is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Lion Chemtech Co and Korean Reinsurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Reinsurance and Lion Chemtech 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 Lion Chemtech Co are associated (or correlated) with Korean Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Reinsurance has no effect on the direction of Lion Chemtech i.e., Lion Chemtech and Korean Reinsurance go up and down completely randomly.
Pair Corralation between Lion Chemtech and Korean Reinsurance
Assuming the 90 days trading horizon Lion Chemtech Co is expected to under-perform the Korean Reinsurance. In addition to that, Lion Chemtech is 1.53 times more volatile than Korean Reinsurance Co. It trades about -0.09 of its total potential returns per unit of risk. Korean Reinsurance Co is currently generating about 0.12 per unit of volatility. If you would invest 439,012 in Korean Reinsurance Co on August 28, 2024 and sell it today you would earn a total of 352,988 from holding Korean Reinsurance Co or generate 80.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Chemtech Co vs. Korean Reinsurance Co
Performance |
| Timeline |
| Lion Chemtech |
| Korean Reinsurance |
Lion Chemtech and Korean Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Chemtech and Korean Reinsurance
The main advantage of trading using opposite Lion Chemtech and Korean Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Chemtech position performs unexpectedly, Korean Reinsurance 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 Korean Reinsurance will offset losses from the drop in Korean Reinsurance's long position.| Lion Chemtech vs. Moonbae Steel | Lion Chemtech vs. Fine Besteel Co | Lion Chemtech vs. J Steel Co | Lion Chemtech vs. DONGKUK STEEL MILL |
| Korean Reinsurance vs. AptaBio Therapeutics | Korean Reinsurance vs. Daewoo SBI SPAC | Korean Reinsurance vs. Dream Security co | Korean Reinsurance vs. Microfriend |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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