Correlation Between Lake Materials and Hansol Chemical
Can any of the company-specific risk be diversified away by investing in both Lake Materials and Hansol Chemical 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 Hansol Chemical 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 Hansol Chemical Co, you can compare the effects of market volatilities on Lake Materials and Hansol Chemical 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 Hansol Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Materials and Hansol Chemical.
Diversification Opportunities for Lake Materials and Hansol Chemical
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lake and Hansol is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Lake Materials Co and Hansol Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansol Chemical 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 Hansol Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansol Chemical has no effect on the direction of Lake Materials i.e., Lake Materials and Hansol Chemical go up and down completely randomly.
Pair Corralation between Lake Materials and Hansol Chemical
Assuming the 90 days trading horizon Lake Materials Co is expected to generate 1.35 times more return on investment than Hansol Chemical. However, Lake Materials is 1.35 times more volatile than Hansol Chemical Co. It trades about 0.13 of its potential returns per unit of risk. Hansol Chemical Co is currently generating about 0.0 per unit of risk. If you would invest 1,107,000 in Lake Materials Co on October 12, 2024 and sell it today you would earn a total of 90,000 from holding Lake Materials Co or generate 8.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lake Materials Co vs. Hansol Chemical Co
Performance |
| Timeline |
| Lake Materials |
| Hansol Chemical |
Lake Materials and Hansol Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Materials and Hansol Chemical
The main advantage of trading using opposite Lake Materials and Hansol Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Materials position performs unexpectedly, Hansol Chemical 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 Hansol Chemical will offset losses from the drop in Hansol Chemical's long position.| Lake Materials vs. Dongbu Insurance Co | Lake Materials vs. Shinhan Inverse Silver | Lake Materials vs. Hankukpackage Co | Lake Materials vs. ChipsMedia |
| Hansol Chemical vs. Lake Materials Co | Hansol Chemical vs. Woori Technology Investment | Hansol Chemical vs. WONIK Materials CoLtd | Hansol Chemical vs. Atinum Investment 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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