Correlation Between LAKE MATERIALS and EV Advanced
Can any of the company-specific risk be diversified away by investing in both LAKE MATERIALS and EV Advanced 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 EV Advanced 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 EV Advanced Material, you can compare the effects of market volatilities on LAKE MATERIALS and EV Advanced 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 EV Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAKE MATERIALS and EV Advanced.
Diversification Opportunities for LAKE MATERIALS and EV Advanced
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LAKE and 131400 is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding LAKE MATERIALS LTD and EV Advanced Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EV Advanced Material 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 EV Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EV Advanced Material has no effect on the direction of LAKE MATERIALS i.e., LAKE MATERIALS and EV Advanced go up and down completely randomly.
Pair Corralation between LAKE MATERIALS and EV Advanced
Assuming the 90 days trading horizon LAKE MATERIALS LTD is expected to under-perform the EV Advanced. But the stock apears to be less risky and, when comparing its historical volatility, LAKE MATERIALS LTD is 1.52 times less risky than EV Advanced. The stock trades about -0.15 of its potential returns per unit of risk. The EV Advanced Material is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 214,000 in EV Advanced Material on August 29, 2024 and sell it today you would earn a total of 5,500 from holding EV Advanced Material or generate 2.57% 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. EV Advanced Material
Performance |
| Timeline |
| LAKE MATERIALS LTD |
| EV Advanced Material |
LAKE MATERIALS and EV Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAKE MATERIALS and EV Advanced
The main advantage of trading using opposite LAKE MATERIALS and EV Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAKE MATERIALS position performs unexpectedly, EV Advanced 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 EV Advanced will offset losses from the drop in EV Advanced's long position.| LAKE MATERIALS vs. Tway Air Co | LAKE MATERIALS vs. Hanmi Semiconductor Co | LAKE MATERIALS vs. Sam Yang Foods | LAKE MATERIALS vs. Jin Air Co |
| EV Advanced vs. Youngsin Metal Industrial | EV Advanced vs. Heungkuk Metaltech CoLtd | EV Advanced vs. Ssangyong Information Communication | EV Advanced 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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