Correlation Between Lion Chemtech and People Technology
Can any of the company-specific risk be diversified away by investing in both Lion Chemtech and People Technology 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 People Technology 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 People Technology, you can compare the effects of market volatilities on Lion Chemtech and People Technology 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 People Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Chemtech and People Technology.
Diversification Opportunities for Lion Chemtech and People Technology
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lion and People is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lion Chemtech Co and People Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on People Technology 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 People Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of People Technology has no effect on the direction of Lion Chemtech i.e., Lion Chemtech and People Technology go up and down completely randomly.
Pair Corralation between Lion Chemtech and People Technology
Assuming the 90 days trading horizon Lion Chemtech Co is expected to under-perform the People Technology. But the stock apears to be less risky and, when comparing its historical volatility, Lion Chemtech Co is 1.62 times less risky than People Technology. The stock trades about -0.07 of its potential returns per unit of risk. The People Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,625,000 in People Technology on August 29, 2024 and sell it today you would earn a total of 1,075,000 from holding People Technology or generate 29.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Chemtech Co vs. People Technology
Performance |
| Timeline |
| Lion Chemtech |
| People Technology |
Lion Chemtech and People Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Chemtech and People Technology
The main advantage of trading using opposite Lion Chemtech and People Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Chemtech position performs unexpectedly, People Technology 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 People Technology will offset losses from the drop in People Technology's long position.| Lion Chemtech vs. CJ Seafood Corp | Lion Chemtech vs. Korea Information Communications | Lion Chemtech vs. Samlip General Foods | Lion Chemtech vs. CKH Food Health |
| People Technology vs. Wonil Special Steel | People Technology vs. DONGKUK STEEL MILL | People Technology vs. Gyeongnam Steel Co | People Technology vs. Jeju Air 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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