Correlation Between LAKE MATERIALS and Air Busan
Can any of the company-specific risk be diversified away by investing in both LAKE MATERIALS and Air Busan 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 Air Busan 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 Air Busan Co, you can compare the effects of market volatilities on LAKE MATERIALS and Air Busan 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 Air Busan. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAKE MATERIALS and Air Busan.
Diversification Opportunities for LAKE MATERIALS and Air Busan
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LAKE and Air is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding LAKE MATERIALS LTD and Air Busan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Busan 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 Air Busan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Busan has no effect on the direction of LAKE MATERIALS i.e., LAKE MATERIALS and Air Busan go up and down completely randomly.
Pair Corralation between LAKE MATERIALS and Air Busan
Assuming the 90 days trading horizon LAKE MATERIALS LTD is expected to generate 3.02 times more return on investment than Air Busan. However, LAKE MATERIALS is 3.02 times more volatile than Air Busan Co. It trades about 0.15 of its potential returns per unit of risk. Air Busan Co is currently generating about -0.05 per unit of risk. If you would invest 1,107,000 in LAKE MATERIALS LTD on October 12, 2024 and sell it today you would earn a total of 106,000 from holding LAKE MATERIALS LTD or generate 9.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LAKE MATERIALS LTD vs. Air Busan Co
Performance |
| Timeline |
| LAKE MATERIALS LTD |
| Air Busan |
LAKE MATERIALS and Air Busan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAKE MATERIALS and Air Busan
The main advantage of trading using opposite LAKE MATERIALS and Air Busan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAKE MATERIALS position performs unexpectedly, Air Busan 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 Air Busan will offset losses from the drop in Air Busan'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 |
| Air Busan vs. LAKE MATERIALS LTD | Air Busan vs. PI Advanced Materials | Air Busan vs. Handok Clean Tech | Air Busan vs. RF Materials 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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