Correlation Between LAKE MATERIALS and Seoyon Topmetal
Can any of the company-specific risk be diversified away by investing in both LAKE MATERIALS and Seoyon Topmetal 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 Seoyon Topmetal 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 Seoyon Topmetal Co, you can compare the effects of market volatilities on LAKE MATERIALS and Seoyon Topmetal 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 Seoyon Topmetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAKE MATERIALS and Seoyon Topmetal.
Diversification Opportunities for LAKE MATERIALS and Seoyon Topmetal
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LAKE and Seoyon is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding LAKE MATERIALS LTD and Seoyon Topmetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoyon Topmetal 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 Seoyon Topmetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoyon Topmetal has no effect on the direction of LAKE MATERIALS i.e., LAKE MATERIALS and Seoyon Topmetal go up and down completely randomly.
Pair Corralation between LAKE MATERIALS and Seoyon Topmetal
Assuming the 90 days trading horizon LAKE MATERIALS LTD is expected to generate 2.31 times more return on investment than Seoyon Topmetal. However, LAKE MATERIALS is 2.31 times more volatile than Seoyon Topmetal Co. It trades about 0.05 of its potential returns per unit of risk. Seoyon Topmetal Co is currently generating about -0.01 per unit of risk. If you would invest 627,000 in LAKE MATERIALS LTD on October 16, 2024 and sell it today you would earn a total of 549,000 from holding LAKE MATERIALS LTD or generate 87.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LAKE MATERIALS LTD vs. Seoyon Topmetal Co
Performance |
| Timeline |
| LAKE MATERIALS LTD |
| Seoyon Topmetal |
LAKE MATERIALS and Seoyon Topmetal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAKE MATERIALS and Seoyon Topmetal
The main advantage of trading using opposite LAKE MATERIALS and Seoyon Topmetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAKE MATERIALS position performs unexpectedly, Seoyon Topmetal 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 Seoyon Topmetal will offset losses from the drop in Seoyon Topmetal's long position.| LAKE MATERIALS vs. ENERGYMACHINERY KOREA CoLtd | LAKE MATERIALS vs. Woorim Machinery Co | LAKE MATERIALS vs. LG Display Co | LAKE MATERIALS vs. Dongbang Ship Machinery |
| Seoyon Topmetal vs. Jinro Distillers Co | Seoyon Topmetal vs. Nature and Environment | Seoyon Topmetal vs. RF Materials Co | Seoyon Topmetal 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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