Correlation Between LAKE MATERIALS and Dongwoo Farm
Can any of the company-specific risk be diversified away by investing in both LAKE MATERIALS and Dongwoo Farm 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 Dongwoo Farm 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 Dongwoo Farm To, you can compare the effects of market volatilities on LAKE MATERIALS and Dongwoo Farm 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 Dongwoo Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAKE MATERIALS and Dongwoo Farm.
Diversification Opportunities for LAKE MATERIALS and Dongwoo Farm
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LAKE and Dongwoo is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding LAKE MATERIALS LTD and Dongwoo Farm To in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwoo Farm To 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 Dongwoo Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwoo Farm To has no effect on the direction of LAKE MATERIALS i.e., LAKE MATERIALS and Dongwoo Farm go up and down completely randomly.
Pair Corralation between LAKE MATERIALS and Dongwoo Farm
Assuming the 90 days trading horizon LAKE MATERIALS LTD is expected to generate 2.37 times more return on investment than Dongwoo Farm. However, LAKE MATERIALS is 2.37 times more volatile than Dongwoo Farm To. It trades about -0.06 of its potential returns per unit of risk. Dongwoo Farm To is currently generating about -0.19 per unit of risk. If you would invest 1,190,000 in LAKE MATERIALS LTD on November 5, 2024 and sell it today you would lose (34,000) from holding LAKE MATERIALS LTD or give up 2.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LAKE MATERIALS LTD vs. Dongwoo Farm To
Performance |
| Timeline |
| LAKE MATERIALS LTD |
| Dongwoo Farm To |
LAKE MATERIALS and Dongwoo Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAKE MATERIALS and Dongwoo Farm
The main advantage of trading using opposite LAKE MATERIALS and Dongwoo Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAKE MATERIALS position performs unexpectedly, Dongwoo Farm 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 Dongwoo Farm will offset losses from the drop in Dongwoo Farm's long position.| LAKE MATERIALS vs. Kukil Metal Co | LAKE MATERIALS vs. Miwon Chemical | LAKE MATERIALS vs. PJ Metal Co | LAKE MATERIALS vs. Hanil Chemical Ind |
| Dongwoo Farm vs. Mobile Appliance | Dongwoo Farm vs. Korea Air Svc | Dongwoo Farm vs. Nice Information Telecommunication | Dongwoo Farm vs. Automobile Pc |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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