Correlation Between LAKE MATERIALS and Shin Steel
Can any of the company-specific risk be diversified away by investing in both LAKE MATERIALS and Shin Steel 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 Shin Steel 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 Shin Steel Co, you can compare the effects of market volatilities on LAKE MATERIALS and Shin Steel 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 Shin Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAKE MATERIALS and Shin Steel.
Diversification Opportunities for LAKE MATERIALS and Shin Steel
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LAKE and Shin is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding LAKE MATERIALS LTD and Shin Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Steel 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 Shin Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Steel has no effect on the direction of LAKE MATERIALS i.e., LAKE MATERIALS and Shin Steel go up and down completely randomly.
Pair Corralation between LAKE MATERIALS and Shin Steel
Assuming the 90 days trading horizon LAKE MATERIALS LTD is expected to generate 1.42 times more return on investment than Shin Steel. However, LAKE MATERIALS is 1.42 times more volatile than Shin Steel Co. It trades about 0.21 of its potential returns per unit of risk. Shin Steel Co is currently generating about 0.22 per unit of risk. If you would invest 1,051,000 in LAKE MATERIALS LTD on October 11, 2024 and sell it today you would earn a total of 164,000 from holding LAKE MATERIALS LTD or generate 15.6% 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. Shin Steel Co
Performance |
| Timeline |
| LAKE MATERIALS LTD |
| Shin Steel |
LAKE MATERIALS and Shin Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAKE MATERIALS and Shin Steel
The main advantage of trading using opposite LAKE MATERIALS and Shin Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAKE MATERIALS position performs unexpectedly, Shin Steel 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 Shin Steel will offset losses from the drop in Shin Steel's long position.| LAKE MATERIALS vs. Next Entertainment World | LAKE MATERIALS vs. Mobileleader CoLtd | LAKE MATERIALS vs. Daishin Information Communications | LAKE MATERIALS vs. Pan Entertainment Co |
| Shin Steel vs. HB Technology TD | Shin Steel vs. Ilji Technology Co | Shin Steel vs. NewFlex Technology Co | Shin Steel vs. Aprogen Healthcare Games |
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 Stocks Directory module to find actively traded stocks across global markets.
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