Correlation Between Lake Materials and ATON
Can any of the company-specific risk be diversified away by investing in both Lake Materials and ATON 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 ATON 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 ATON Inc, you can compare the effects of market volatilities on Lake Materials and ATON 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 ATON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Materials and ATON.
Diversification Opportunities for Lake Materials and ATON
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lake and ATON is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Lake Materials Co and ATON Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATON Inc 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 ATON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATON Inc has no effect on the direction of Lake Materials i.e., Lake Materials and ATON go up and down completely randomly.
Pair Corralation between Lake Materials and ATON
Assuming the 90 days trading horizon Lake Materials Co is expected to under-perform the ATON. But the stock apears to be less risky and, when comparing its historical volatility, Lake Materials Co is 1.4 times less risky than ATON. The stock trades about -0.07 of its potential returns per unit of risk. The ATON Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 540,000 in ATON Inc on September 25, 2024 and sell it today you would earn a total of 22,000 from holding ATON Inc or generate 4.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lake Materials Co vs. ATON Inc
Performance |
| Timeline |
| Lake Materials |
| ATON Inc |
Lake Materials and ATON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Materials and ATON
The main advantage of trading using opposite Lake Materials and ATON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Materials position performs unexpectedly, ATON 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 ATON will offset losses from the drop in ATON'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 |
| ATON vs. Hanjoo Light Metal | ATON vs. Kukil Metal Co | ATON vs. Lake Materials Co | ATON vs. Samsung Publishing 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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