Correlation Between Lion Chemtech and Cuckoo Electronics
Can any of the company-specific risk be diversified away by investing in both Lion Chemtech and Cuckoo Electronics 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 Cuckoo Electronics 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 Cuckoo Electronics Co, you can compare the effects of market volatilities on Lion Chemtech and Cuckoo Electronics 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 Cuckoo Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Chemtech and Cuckoo Electronics.
Diversification Opportunities for Lion Chemtech and Cuckoo Electronics
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lion and Cuckoo is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lion Chemtech Co and Cuckoo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cuckoo Electronics 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 Cuckoo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cuckoo Electronics has no effect on the direction of Lion Chemtech i.e., Lion Chemtech and Cuckoo Electronics go up and down completely randomly.
Pair Corralation between Lion Chemtech and Cuckoo Electronics
Assuming the 90 days trading horizon Lion Chemtech Co is expected to under-perform the Cuckoo Electronics. In addition to that, Lion Chemtech is 1.44 times more volatile than Cuckoo Electronics Co. It trades about -0.09 of its total potential returns per unit of risk. Cuckoo Electronics Co is currently generating about -0.11 per unit of volatility. If you would invest 2,315,000 in Cuckoo Electronics Co on October 28, 2024 and sell it today you would lose (55,000) from holding Cuckoo Electronics Co or give up 2.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Chemtech Co vs. Cuckoo Electronics Co
Performance |
| Timeline |
| Lion Chemtech |
| Cuckoo Electronics |
Lion Chemtech and Cuckoo Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Chemtech and Cuckoo Electronics
The main advantage of trading using opposite Lion Chemtech and Cuckoo Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Chemtech position performs unexpectedly, Cuckoo Electronics 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 Cuckoo Electronics will offset losses from the drop in Cuckoo Electronics' long position.| Lion Chemtech vs. Nature and Environment | Lion Chemtech vs. Cheryong Industrial CoLtd | Lion Chemtech vs. Busan Industrial Co | Lion Chemtech vs. Busan Ind |
| Cuckoo Electronics vs. Samsung Electronics Co | Cuckoo Electronics vs. Samsung Electronics Co | Cuckoo Electronics vs. KB Financial Group | Cuckoo Electronics vs. Shinhan Financial Group |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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