Correlation Between LAKE MATERIALS and Busan Ind
Can any of the company-specific risk be diversified away by investing in both LAKE MATERIALS and Busan Ind 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 Busan Ind 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 Busan Ind, you can compare the effects of market volatilities on LAKE MATERIALS and Busan Ind 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 Busan Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAKE MATERIALS and Busan Ind.
Diversification Opportunities for LAKE MATERIALS and Busan Ind
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LAKE and Busan is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding LAKE MATERIALS LTD and Busan Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Ind 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 Busan Ind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Ind has no effect on the direction of LAKE MATERIALS i.e., LAKE MATERIALS and Busan Ind go up and down completely randomly.
Pair Corralation between LAKE MATERIALS and Busan Ind
Assuming the 90 days trading horizon LAKE MATERIALS LTD is expected to under-perform the Busan Ind. But the stock apears to be less risky and, when comparing its historical volatility, LAKE MATERIALS LTD is 1.13 times less risky than Busan Ind. The stock trades about -0.18 of its potential returns per unit of risk. The Busan Ind is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 7,650,000 in Busan Ind on November 7, 2024 and sell it today you would lose (490,000) from holding Busan Ind or give up 6.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LAKE MATERIALS LTD vs. Busan Ind
Performance |
| Timeline |
| LAKE MATERIALS LTD |
| Busan Ind |
LAKE MATERIALS and Busan Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAKE MATERIALS and Busan Ind
The main advantage of trading using opposite LAKE MATERIALS and Busan Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAKE MATERIALS position performs unexpectedly, Busan Ind 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 Busan Ind will offset losses from the drop in Busan Ind's long position.| LAKE MATERIALS vs. Lion Chemtech Co | LAKE MATERIALS vs. PNC Technologies co | LAKE MATERIALS vs. V One Tech Co | LAKE MATERIALS vs. PH Tech Co |
| Busan Ind vs. Sempio Foods Co | Busan Ind vs. Sung Bo Chemicals | Busan Ind vs. Kukdo Chemical Co | Busan Ind vs. Lotte Fine Chemical |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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