Correlation Between Lion Chemtech and Hana Materials
Can any of the company-specific risk be diversified away by investing in both Lion Chemtech and Hana 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 Lion Chemtech and Hana Materials 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 Hana Materials, you can compare the effects of market volatilities on Lion Chemtech and Hana 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 Lion Chemtech with a short position of Hana Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Chemtech and Hana Materials.
Diversification Opportunities for Lion Chemtech and Hana Materials
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lion and Hana is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lion Chemtech Co and Hana Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Materials 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 Hana Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Materials has no effect on the direction of Lion Chemtech i.e., Lion Chemtech and Hana Materials go up and down completely randomly.
Pair Corralation between Lion Chemtech and Hana Materials
Assuming the 90 days trading horizon Lion Chemtech Co is expected to generate 1.21 times more return on investment than Hana Materials. However, Lion Chemtech is 1.21 times more volatile than Hana Materials. It trades about 0.06 of its potential returns per unit of risk. Hana Materials is currently generating about -0.31 per unit of risk. If you would invest 240,000 in Lion Chemtech Co on August 28, 2024 and sell it today you would earn a total of 8,000 from holding Lion Chemtech Co or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Chemtech Co vs. Hana Materials
Performance |
| Timeline |
| Lion Chemtech |
| Hana Materials |
Lion Chemtech and Hana Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Chemtech and Hana Materials
The main advantage of trading using opposite Lion Chemtech and Hana Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Chemtech position performs unexpectedly, Hana 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 Hana Materials will offset losses from the drop in Hana Materials' long position.| Lion Chemtech vs. Automobile Pc | Lion Chemtech vs. Sunny Electronics Corp | Lion Chemtech vs. Sangshin Electronics Co | Lion Chemtech vs. ChipsMedia |
| Hana Materials vs. SK Hynix | Hana Materials vs. People Technology | Hana Materials vs. SIMMTECH Co | Hana Materials vs. Haesung DS 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 CEOs Directory module to screen CEOs from public companies around the world.
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