Correlation Between LAKE MATERIALS and RFTech
Can any of the company-specific risk be diversified away by investing in both LAKE MATERIALS and RFTech 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 RFTech 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 RFTech Co, you can compare the effects of market volatilities on LAKE MATERIALS and RFTech 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 RFTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAKE MATERIALS and RFTech.
Diversification Opportunities for LAKE MATERIALS and RFTech
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LAKE and RFTech is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding LAKE MATERIALS LTD and RFTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RFTech 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 RFTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RFTech has no effect on the direction of LAKE MATERIALS i.e., LAKE MATERIALS and RFTech go up and down completely randomly.
Pair Corralation between LAKE MATERIALS and RFTech
Assuming the 90 days trading horizon LAKE MATERIALS LTD is expected to under-perform the RFTech. In addition to that, LAKE MATERIALS is 1.85 times more volatile than RFTech Co. It trades about -0.15 of its total potential returns per unit of risk. RFTech Co is currently generating about 0.34 per unit of volatility. If you would invest 289,000 in RFTech Co on August 29, 2024 and sell it today you would earn a total of 41,500 from holding RFTech Co or generate 14.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LAKE MATERIALS LTD vs. RFTech Co
Performance |
| Timeline |
| LAKE MATERIALS LTD |
| RFTech |
LAKE MATERIALS and RFTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAKE MATERIALS and RFTech
The main advantage of trading using opposite LAKE MATERIALS and RFTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAKE MATERIALS position performs unexpectedly, RFTech 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 RFTech will offset losses from the drop in RFTech'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 |
| RFTech vs. Daou Technology | RFTech vs. Ssangyong Information Communication | RFTech vs. Digital Power Communications | RFTech vs. Sangsin Energy Display |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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