Correlation Between LAKE MATERIALS and Hwangkum Steel
Can any of the company-specific risk be diversified away by investing in both LAKE MATERIALS and Hwangkum Steel 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 Hwangkum Steel 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 Hwangkum Steel Technology, you can compare the effects of market volatilities on LAKE MATERIALS and Hwangkum Steel 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 Hwangkum Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAKE MATERIALS and Hwangkum Steel.
Diversification Opportunities for LAKE MATERIALS and Hwangkum Steel
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LAKE and Hwangkum is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding LAKE MATERIALS LTD and Hwangkum Steel Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwangkum Steel Technology 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 Hwangkum Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwangkum Steel Technology has no effect on the direction of LAKE MATERIALS i.e., LAKE MATERIALS and Hwangkum Steel go up and down completely randomly.
Pair Corralation between LAKE MATERIALS and Hwangkum Steel
Assuming the 90 days trading horizon LAKE MATERIALS LTD is expected to generate 6.26 times more return on investment than Hwangkum Steel. However, LAKE MATERIALS is 6.26 times more volatile than Hwangkum Steel Technology. It trades about 0.12 of its potential returns per unit of risk. Hwangkum Steel Technology is currently generating about 0.14 per unit of risk. If you would invest 1,090,000 in LAKE MATERIALS LTD on November 3, 2024 and sell it today you would earn a total of 66,000 from holding LAKE MATERIALS LTD or generate 6.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LAKE MATERIALS LTD vs. Hwangkum Steel Technology
Performance |
| Timeline |
| LAKE MATERIALS LTD |
| Hwangkum Steel Technology |
LAKE MATERIALS and Hwangkum Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAKE MATERIALS and Hwangkum Steel
The main advantage of trading using opposite LAKE MATERIALS and Hwangkum Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAKE MATERIALS position performs unexpectedly, Hwangkum Steel 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 Hwangkum Steel will offset losses from the drop in Hwangkum Steel's long position.| LAKE MATERIALS vs. Lotte Non Life Insurance | LAKE MATERIALS vs. Seers Technology | LAKE MATERIALS vs. Korean Reinsurance Co | LAKE MATERIALS vs. Pureun Mutual Savings |
| Hwangkum Steel vs. Bookook Steel | Hwangkum Steel vs. Wonil Special Steel | Hwangkum Steel vs. Insung Information Co | Hwangkum Steel vs. Dong A Steel Technology |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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