Correlation Between Lake Materials and LAKE MATERIALS
Can any of the company-specific risk be diversified away by investing in both Lake Materials and LAKE MATERIALS 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 LAKE MATERIALS 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 LAKE MATERIALS LTD, you can compare the effects of market volatilities on Lake Materials and LAKE MATERIALS 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 LAKE MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Materials and LAKE MATERIALS.
Diversification Opportunities for Lake Materials and LAKE MATERIALS
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Lake and LAKE is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Lake Materials Co and LAKE MATERIALS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAKE MATERIALS LTD 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 LAKE MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAKE MATERIALS LTD has no effect on the direction of Lake Materials i.e., Lake Materials and LAKE MATERIALS go up and down completely randomly.
Pair Corralation between Lake Materials and LAKE MATERIALS
Assuming the 90 days trading horizon If you would invest 1,441,000 in LAKE MATERIALS LTD on August 29, 2024 and sell it today you would lose (172,000) from holding LAKE MATERIALS LTD or give up 11.94% 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. LAKE MATERIALS LTD
Performance |
| Timeline |
| Lake Materials |
| LAKE MATERIALS LTD |
Lake Materials and LAKE MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Materials and LAKE MATERIALS
The main advantage of trading using opposite Lake Materials and LAKE MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Materials position performs unexpectedly, LAKE MATERIALS 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 LAKE MATERIALS will offset losses from the drop in LAKE MATERIALS'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 |
| LAKE MATERIALS vs. Samsung Electronics Co | LAKE MATERIALS vs. Samsung Electronics Co | LAKE MATERIALS vs. LG Energy Solution | LAKE MATERIALS vs. SK Hynix |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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