Correlation Between Lake Materials and Korea Refract
Can any of the company-specific risk be diversified away by investing in both Lake Materials and Korea Refract 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 Lake Materials and Korea Refract into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lake Materials Co and Korea Refract, you can compare the effects of market volatilities on Lake Materials and Korea Refract 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 Lake Materials with a short position of Korea Refract. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Materials and Korea Refract.
Diversification Opportunities for Lake Materials and Korea Refract
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lake and Korea is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Lake Materials Co and Korea Refract in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Refract and Lake Materials 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 Lake Materials Co are associated (or correlated) with Korea Refract. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Refract has no effect on the direction of Lake Materials i.e., Lake Materials and Korea Refract go up and down completely randomly.
Pair Corralation between Lake Materials and Korea Refract
Assuming the 90 days trading horizon Lake Materials Co is expected to under-perform the Korea Refract. In addition to that, Lake Materials is 1.89 times more volatile than Korea Refract. It trades about -0.28 of its total potential returns per unit of risk. Korea Refract is currently generating about -0.18 per unit of volatility. If you would invest 228,500 in Korea Refract on September 1, 2024 and sell it today you would lose (16,500) from holding Korea Refract or give up 7.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lake Materials Co vs. Korea Refract
Performance |
| Timeline |
| Lake Materials |
| Korea Refract |
Lake Materials and Korea Refract Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Materials and Korea Refract
The main advantage of trading using opposite Lake Materials and Korea Refract positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Materials position performs unexpectedly, Korea Refract 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 Korea Refract will offset losses from the drop in Korea Refract's long position.| Lake Materials vs. Samsung Electronics Co | Lake Materials vs. Samsung Electronics Co | Lake Materials vs. LG Energy Solution | Lake Materials vs. SK Hynix |
| Korea Refract vs. GS Retail Co | Korea Refract vs. Kukdo Chemical Co | Korea Refract vs. Korea Investment Holdings | Korea Refract vs. Sung Bo Chemicals |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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