Correlation Between Lion Chemtech and HYBE Co
Can any of the company-specific risk be diversified away by investing in both Lion Chemtech and HYBE Co 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 HYBE Co 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 HYBE Co, you can compare the effects of market volatilities on Lion Chemtech and HYBE Co 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 HYBE Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Chemtech and HYBE Co.
Diversification Opportunities for Lion Chemtech and HYBE Co
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lion and HYBE is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Lion Chemtech Co and HYBE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYBE Co 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 HYBE Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYBE Co has no effect on the direction of Lion Chemtech i.e., Lion Chemtech and HYBE Co go up and down completely randomly.
Pair Corralation between Lion Chemtech and HYBE Co
Assuming the 90 days trading horizon Lion Chemtech Co is expected to under-perform the HYBE Co. But the stock apears to be less risky and, when comparing its historical volatility, Lion Chemtech Co is 1.11 times less risky than HYBE Co. The stock trades about -0.05 of its potential returns per unit of risk. The HYBE Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 24,075,400 in HYBE Co on September 12, 2024 and sell it today you would lose (4,335,400) from holding HYBE Co or give up 18.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Chemtech Co vs. HYBE Co
Performance |
| Timeline |
| Lion Chemtech |
| HYBE Co |
Lion Chemtech and HYBE Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Chemtech and HYBE Co
The main advantage of trading using opposite Lion Chemtech and HYBE Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Chemtech position performs unexpectedly, HYBE Co 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 HYBE Co will offset losses from the drop in HYBE Co's long position.| Lion Chemtech vs. Nature and Environment | Lion Chemtech vs. Cheryong Industrial CoLtd | Lion Chemtech vs. Solution Advanced Technology | Lion Chemtech vs. Busan Industrial Co |
| HYBE Co vs. V One Tech Co | HYBE Co vs. RFTech Co | HYBE Co vs. Dongbang Ship Machinery | HYBE Co vs. Lion Chemtech 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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