Correlation Between Lake Materials and Tuksu Engineering
Can any of the company-specific risk be diversified away by investing in both Lake Materials and Tuksu Engineering 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 Tuksu Engineering 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 Tuksu Engineering ConstructionLtd, you can compare the effects of market volatilities on Lake Materials and Tuksu Engineering 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 Tuksu Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Materials and Tuksu Engineering.
Diversification Opportunities for Lake Materials and Tuksu Engineering
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lake and Tuksu is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lake Materials Co and Tuksu Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tuksu Engineering 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 Tuksu Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tuksu Engineering has no effect on the direction of Lake Materials i.e., Lake Materials and Tuksu Engineering go up and down completely randomly.
Pair Corralation between Lake Materials and Tuksu Engineering
Assuming the 90 days trading horizon Lake Materials Co is expected to under-perform the Tuksu Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Lake Materials Co is 1.1 times less risky than Tuksu Engineering. The stock trades about -0.15 of its potential returns per unit of risk. The Tuksu Engineering ConstructionLtd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 624,000 in Tuksu Engineering ConstructionLtd on August 29, 2024 and sell it today you would earn a total of 9,000 from holding Tuksu Engineering ConstructionLtd or generate 1.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lake Materials Co vs. Tuksu Engineering Construction
Performance |
| Timeline |
| Lake Materials |
| Tuksu Engineering |
Lake Materials and Tuksu Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Materials and Tuksu Engineering
The main advantage of trading using opposite Lake Materials and Tuksu Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Materials position performs unexpectedly, Tuksu Engineering 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 Tuksu Engineering will offset losses from the drop in Tuksu Engineering'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 |
| Tuksu Engineering vs. Samsung Electronics Co | Tuksu Engineering vs. Samsung Electronics Co | Tuksu Engineering vs. Hyundai Motor Co | Tuksu Engineering vs. Hyundai Motor |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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