Correlation Between LAKE MATERIALS and Hyundai
Can any of the company-specific risk be diversified away by investing in both LAKE MATERIALS and Hyundai 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 Hyundai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LAKE MATERIALS LTD and Hyundai Motor Co, you can compare the effects of market volatilities on LAKE MATERIALS and Hyundai 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 Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAKE MATERIALS and Hyundai.
Diversification Opportunities for LAKE MATERIALS and Hyundai
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LAKE and Hyundai is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding LAKE MATERIALS LTD and Hyundai Motor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor 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 LTD are associated (or correlated) with Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Motor has no effect on the direction of LAKE MATERIALS i.e., LAKE MATERIALS and Hyundai go up and down completely randomly.
Pair Corralation between LAKE MATERIALS and Hyundai
Assuming the 90 days trading horizon LAKE MATERIALS LTD is expected to under-perform the Hyundai. In addition to that, LAKE MATERIALS is 2.22 times more volatile than Hyundai Motor Co. It trades about -0.17 of its total potential returns per unit of risk. Hyundai Motor Co is currently generating about -0.08 per unit of volatility. If you would invest 16,850,000 in Hyundai Motor Co on August 28, 2024 and sell it today you would lose (500,000) from holding Hyundai Motor Co or give up 2.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LAKE MATERIALS LTD vs. Hyundai Motor Co
Performance |
| Timeline |
| LAKE MATERIALS LTD |
| Hyundai Motor |
LAKE MATERIALS and Hyundai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAKE MATERIALS and Hyundai
The main advantage of trading using opposite LAKE MATERIALS and Hyundai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAKE MATERIALS position performs unexpectedly, Hyundai 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 Hyundai will offset losses from the drop in Hyundai'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 |
| Hyundai vs. Lake Materials Co | Hyundai vs. KB Financial Group | Hyundai vs. Jeju Air Co | Hyundai vs. LAKE MATERIALS LTD |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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