Correlation Between Lion Chemtech and IL Science
Can any of the company-specific risk be diversified away by investing in both Lion Chemtech and IL Science 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 IL Science 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 IL Science Co, you can compare the effects of market volatilities on Lion Chemtech and IL Science 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 IL Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Chemtech and IL Science.
Diversification Opportunities for Lion Chemtech and IL Science
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lion and 307180 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lion Chemtech Co and IL Science Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IL Science 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 IL Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IL Science has no effect on the direction of Lion Chemtech i.e., Lion Chemtech and IL Science go up and down completely randomly.
Pair Corralation between Lion Chemtech and IL Science
Assuming the 90 days trading horizon Lion Chemtech Co is expected to under-perform the IL Science. In addition to that, Lion Chemtech is 1.91 times more volatile than IL Science Co. It trades about -0.13 of its total potential returns per unit of risk. IL Science Co is currently generating about 0.27 per unit of volatility. If you would invest 264,000 in IL Science Co on October 20, 2024 and sell it today you would earn a total of 27,500 from holding IL Science Co or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Chemtech Co vs. IL Science Co
Performance |
| Timeline |
| Lion Chemtech |
| IL Science |
Lion Chemtech and IL Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Chemtech and IL Science
The main advantage of trading using opposite Lion Chemtech and IL Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Chemtech position performs unexpectedly, IL Science 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 IL Science will offset losses from the drop in IL Science's long position.| Lion Chemtech vs. RFTech Co | Lion Chemtech vs. Shinhan Inverse Silver | Lion Chemtech vs. Hanmi Semiconductor Co | Lion Chemtech vs. A Tech Solution Co |
| IL Science vs. Lion Chemtech Co | IL Science vs. Kuk Young GM | IL Science vs. Nature and Environment | IL Science vs. Cheryong Industrial CoLtd |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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