Correlation Between Lake Materials and Hankook Steel
Can any of the company-specific risk be diversified away by investing in both Lake Materials and Hankook Steel 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 Hankook Steel 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 Hankook Steel Co, you can compare the effects of market volatilities on Lake Materials and Hankook Steel 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 Hankook Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Materials and Hankook Steel.
Diversification Opportunities for Lake Materials and Hankook Steel
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lake and Hankook is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Lake Materials Co and Hankook Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankook Steel 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 Hankook Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankook Steel has no effect on the direction of Lake Materials i.e., Lake Materials and Hankook Steel go up and down completely randomly.
Pair Corralation between Lake Materials and Hankook Steel
Assuming the 90 days trading horizon Lake Materials Co is expected to generate 4.54 times more return on investment than Hankook Steel. However, Lake Materials is 4.54 times more volatile than Hankook Steel Co. It trades about 0.38 of its potential returns per unit of risk. Hankook Steel Co is currently generating about -0.18 per unit of risk. If you would invest 1,160,000 in Lake Materials Co on November 22, 2024 and sell it today you would earn a total of 600,000 from holding Lake Materials Co or generate 51.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lake Materials Co vs. Hankook Steel Co
Performance |
| Timeline |
| Lake Materials |
| Hankook Steel |
Lake Materials and Hankook Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Materials and Hankook Steel
The main advantage of trading using opposite Lake Materials and Hankook Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Materials position performs unexpectedly, Hankook Steel 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 Hankook Steel will offset losses from the drop in Hankook Steel's long position.| Lake Materials vs. Sungmoon Electronics Co | Lake Materials vs. Miwon Chemicals Co | Lake Materials vs. Seoul Electronics Telecom | Lake Materials vs. SK Chemicals Co |
| Hankook Steel vs. DB Financial Investment | Hankook Steel vs. CG Hi Tech | Hankook Steel vs. SV Investment | Hankook Steel vs. Korea Computer |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |