Correlation Between Lake Materials and Netmarble Games
Can any of the company-specific risk be diversified away by investing in both Lake Materials and Netmarble Games 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 Netmarble Games 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 Netmarble Games Corp, you can compare the effects of market volatilities on Lake Materials and Netmarble Games 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 Netmarble Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Materials and Netmarble Games.
Diversification Opportunities for Lake Materials and Netmarble Games
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lake and Netmarble is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Lake Materials Co and Netmarble Games Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netmarble Games Corp 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 Netmarble Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netmarble Games Corp has no effect on the direction of Lake Materials i.e., Lake Materials and Netmarble Games go up and down completely randomly.
Pair Corralation between Lake Materials and Netmarble Games
Assuming the 90 days trading horizon Lake Materials Co is expected to under-perform the Netmarble Games. In addition to that, Lake Materials is 1.09 times more volatile than Netmarble Games Corp. It trades about -0.28 of its total potential returns per unit of risk. Netmarble Games Corp is currently generating about -0.12 per unit of volatility. If you would invest 5,800,000 in Netmarble Games Corp on September 1, 2024 and sell it today you would lose (500,000) from holding Netmarble Games Corp or give up 8.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lake Materials Co vs. Netmarble Games Corp
Performance |
| Timeline |
| Lake Materials |
| Netmarble Games Corp |
Lake Materials and Netmarble Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Materials and Netmarble Games
The main advantage of trading using opposite Lake Materials and Netmarble Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Materials position performs unexpectedly, Netmarble Games 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 Netmarble Games will offset losses from the drop in Netmarble Games' 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 |
| Netmarble Games vs. AfreecaTV Co | Netmarble Games vs. Seegene | Netmarble Games vs. SS TECH | Netmarble Games vs. Busan Industrial 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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