Correlation Between Lake Materials and Iljin Display
Can any of the company-specific risk be diversified away by investing in both Lake Materials and Iljin Display 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 Iljin Display 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 Iljin Display, you can compare the effects of market volatilities on Lake Materials and Iljin Display 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 Iljin Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Materials and Iljin Display.
Diversification Opportunities for Lake Materials and Iljin Display
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lake and Iljin is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lake Materials Co and Iljin Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iljin Display 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 Iljin Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iljin Display has no effect on the direction of Lake Materials i.e., Lake Materials and Iljin Display go up and down completely randomly.
Pair Corralation between Lake Materials and Iljin Display
Assuming the 90 days trading horizon Lake Materials Co is expected to generate 1.56 times more return on investment than Iljin Display. However, Lake Materials is 1.56 times more volatile than Iljin Display. It trades about 0.05 of its potential returns per unit of risk. Iljin Display is currently generating about -0.01 per unit of risk. If you would invest 583,000 in Lake Materials Co on October 25, 2024 and sell it today you would earn a total of 574,000 from holding Lake Materials Co or generate 98.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lake Materials Co vs. Iljin Display
Performance |
| Timeline |
| Lake Materials |
| Iljin Display |
Lake Materials and Iljin Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Materials and Iljin Display
The main advantage of trading using opposite Lake Materials and Iljin Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Materials position performs unexpectedly, Iljin Display 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 Iljin Display will offset losses from the drop in Iljin Display's long position.| Lake Materials vs. Sempio Foods Co | Lake Materials vs. Youngbo Chemical Co | Lake Materials vs. Daejung Chemicals Metals | Lake Materials vs. KPX Green Chemical |
| Iljin Display vs. Sung Bo Chemicals | Iljin Display vs. Eagon Industrial Co | Iljin Display vs. Kukdong Oil Chemicals | Iljin Display vs. Hyunwoo Industrial 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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