Correlation Between Lake Materials and FNSTech
Can any of the company-specific risk be diversified away by investing in both Lake Materials and FNSTech 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 FNSTech 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 FNSTech Co, you can compare the effects of market volatilities on Lake Materials and FNSTech 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 FNSTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Materials and FNSTech.
Diversification Opportunities for Lake Materials and FNSTech
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lake and FNSTech is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Lake Materials Co and FNSTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNSTech 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 FNSTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNSTech has no effect on the direction of Lake Materials i.e., Lake Materials and FNSTech go up and down completely randomly.
Pair Corralation between Lake Materials and FNSTech
Assuming the 90 days trading horizon Lake Materials Co is expected to under-perform the FNSTech. But the stock apears to be less risky and, when comparing its historical volatility, Lake Materials Co is 1.13 times less risky than FNSTech. The stock trades about -0.12 of its potential returns per unit of risk. The FNSTech Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,002,000 in FNSTech Co on October 14, 2024 and sell it today you would lose (66,000) from holding FNSTech Co or give up 6.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lake Materials Co vs. FNSTech Co
Performance |
| Timeline |
| Lake Materials |
| FNSTech |
Lake Materials and FNSTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Materials and FNSTech
The main advantage of trading using opposite Lake Materials and FNSTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Materials position performs unexpectedly, FNSTech 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 FNSTech will offset losses from the drop in FNSTech'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 |
| FNSTech vs. Lake Materials Co | FNSTech vs. Sejong Telecom | FNSTech vs. INNOX Advanced Materials | FNSTech vs. Kolon Plastics |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |