Correlation Between Company K and Lindeman Asia
Can any of the company-specific risk be diversified away by investing in both Company K and Lindeman Asia 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 Company K and Lindeman Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Company K Partners and Lindeman Asia Investment, you can compare the effects of market volatilities on Company K and Lindeman Asia 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 Company K with a short position of Lindeman Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Company K and Lindeman Asia.
Diversification Opportunities for Company K and Lindeman Asia
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Company and Lindeman is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Company K Partners and Lindeman Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindeman Asia Investment and Company K 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 Company K Partners are associated (or correlated) with Lindeman Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindeman Asia Investment has no effect on the direction of Company K i.e., Company K and Lindeman Asia go up and down completely randomly.
Pair Corralation between Company K and Lindeman Asia
Assuming the 90 days trading horizon Company K Partners is expected to generate 1.05 times more return on investment than Lindeman Asia. However, Company K is 1.05 times more volatile than Lindeman Asia Investment. It trades about 0.01 of its potential returns per unit of risk. Lindeman Asia Investment is currently generating about 0.01 per unit of risk. If you would invest 554,014 in Company K Partners on September 12, 2024 and sell it today you would lose (83,014) from holding Company K Partners or give up 14.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Company K Partners vs. Lindeman Asia Investment
Performance |
| Timeline |
| Company K Partners |
| Lindeman Asia Investment |
Company K and Lindeman Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Company K and Lindeman Asia
The main advantage of trading using opposite Company K and Lindeman Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Company K position performs unexpectedly, Lindeman Asia 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 Lindeman Asia will offset losses from the drop in Lindeman Asia's long position.| Company K vs. Shinsegae Information Communication | Company K vs. Ssangyong Information Communication | Company K vs. Moadata Co | Company K vs. DataSolution |
| Lindeman Asia vs. Nh Investment And | Lindeman Asia vs. Hanwha InvestmentSecurities Co | Lindeman Asia vs. Company K Partners | Lindeman Asia vs. FnGuide |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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