Correlation Between LAKE MATERIALS and Hironic
Can any of the company-specific risk be diversified away by investing in both LAKE MATERIALS and Hironic 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 Hironic 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 Hironic Co, you can compare the effects of market volatilities on LAKE MATERIALS and Hironic 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 Hironic. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAKE MATERIALS and Hironic.
Diversification Opportunities for LAKE MATERIALS and Hironic
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LAKE and Hironic is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding LAKE MATERIALS LTD and Hironic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hironic 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 Hironic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hironic has no effect on the direction of LAKE MATERIALS i.e., LAKE MATERIALS and Hironic go up and down completely randomly.
Pair Corralation between LAKE MATERIALS and Hironic
Assuming the 90 days trading horizon LAKE MATERIALS LTD is expected to under-perform the Hironic. But the stock apears to be less risky and, when comparing its historical volatility, LAKE MATERIALS LTD is 1.01 times less risky than Hironic. The stock trades about -0.1 of its potential returns per unit of risk. The Hironic Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 821,000 in Hironic Co on November 2, 2024 and sell it today you would lose (167,000) from holding Hironic Co or give up 20.34% 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. Hironic Co
Performance |
| Timeline |
| LAKE MATERIALS LTD |
| Hironic |
LAKE MATERIALS and Hironic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAKE MATERIALS and Hironic
The main advantage of trading using opposite LAKE MATERIALS and Hironic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAKE MATERIALS position performs unexpectedly, Hironic 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 Hironic will offset losses from the drop in Hironic'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 |
| Hironic vs. Daejung Chemicals Metals | Hironic vs. DB Financial Investment | Hironic vs. E Investment Development | Hironic vs. Miwon Chemicals Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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