Correlation Between LAKE MATERIALS and Mgame Corp
Can any of the company-specific risk be diversified away by investing in both LAKE MATERIALS and Mgame Corp 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 Mgame Corp 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 Mgame Corp, you can compare the effects of market volatilities on LAKE MATERIALS and Mgame Corp 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 Mgame Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAKE MATERIALS and Mgame Corp.
Diversification Opportunities for LAKE MATERIALS and Mgame Corp
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LAKE and Mgame is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding LAKE MATERIALS LTD and Mgame Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mgame Corp 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 Mgame Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mgame Corp has no effect on the direction of LAKE MATERIALS i.e., LAKE MATERIALS and Mgame Corp go up and down completely randomly.
Pair Corralation between LAKE MATERIALS and Mgame Corp
Assuming the 90 days trading horizon LAKE MATERIALS LTD is expected to generate 1.95 times more return on investment than Mgame Corp. However, LAKE MATERIALS is 1.95 times more volatile than Mgame Corp. It trades about 0.06 of its potential returns per unit of risk. Mgame Corp is currently generating about -0.02 per unit of risk. If you would invest 518,000 in LAKE MATERIALS LTD on October 13, 2024 and sell it today you would earn a total of 679,000 from holding LAKE MATERIALS LTD or generate 131.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.83% |
| Values | Daily Returns |
LAKE MATERIALS LTD vs. Mgame Corp
Performance |
| Timeline |
| LAKE MATERIALS LTD |
| Mgame Corp |
LAKE MATERIALS and Mgame Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAKE MATERIALS and Mgame Corp
The main advantage of trading using opposite LAKE MATERIALS and Mgame Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAKE MATERIALS position performs unexpectedly, Mgame Corp 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 Mgame Corp will offset losses from the drop in Mgame Corp's long position.| LAKE MATERIALS vs. Raontech | LAKE MATERIALS vs. PH Tech Co | LAKE MATERIALS vs. Techwing | LAKE MATERIALS vs. Asia Technology Co |
| Mgame Corp vs. EV Advanced Material | Mgame Corp vs. Finebesteel | Mgame Corp vs. Hyundai Engineering Plastics | Mgame Corp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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