Correlation Between Lake Materials and Mobile Appliance
Can any of the company-specific risk be diversified away by investing in both Lake Materials and Mobile Appliance 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 Mobile Appliance 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 Mobile Appliance, you can compare the effects of market volatilities on Lake Materials and Mobile Appliance 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 Mobile Appliance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Materials and Mobile Appliance.
Diversification Opportunities for Lake Materials and Mobile Appliance
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lake and Mobile is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Lake Materials Co and Mobile Appliance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobile Appliance 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 Mobile Appliance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobile Appliance has no effect on the direction of Lake Materials i.e., Lake Materials and Mobile Appliance go up and down completely randomly.
Pair Corralation between Lake Materials and Mobile Appliance
Assuming the 90 days trading horizon Lake Materials Co is expected to generate 1.34 times more return on investment than Mobile Appliance. However, Lake Materials is 1.34 times more volatile than Mobile Appliance. It trades about 0.0 of its potential returns per unit of risk. Mobile Appliance is currently generating about -0.02 per unit of risk. If you would invest 1,498,000 in Lake Materials Co on September 3, 2024 and sell it today you would lose (342,000) from holding Lake Materials Co or give up 22.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lake Materials Co vs. Mobile Appliance
Performance |
| Timeline |
| Lake Materials |
| Mobile Appliance |
Lake Materials and Mobile Appliance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Materials and Mobile Appliance
The main advantage of trading using opposite Lake Materials and Mobile Appliance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Materials position performs unexpectedly, Mobile Appliance 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 Mobile Appliance will offset losses from the drop in Mobile Appliance's long position.| Lake Materials vs. Lotte Data Communication | Lake Materials vs. Ssangyong Information Communication | Lake Materials vs. Digital Power Communications | Lake Materials vs. Hyundai Home Shopping |
| Mobile Appliance vs. Daishin Information Communications | Mobile Appliance vs. BNK Financial Group | Mobile Appliance vs. Jb Financial | Mobile Appliance vs. Shinhan Financial Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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