Correlation Between KakaoBank Corp and LAKE MATERIALS
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp and LAKE MATERIALS 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 KakaoBank Corp and LAKE MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and LAKE MATERIALS LTD, you can compare the effects of market volatilities on KakaoBank Corp and LAKE MATERIALS 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 KakaoBank Corp with a short position of LAKE MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and LAKE MATERIALS.
Diversification Opportunities for KakaoBank Corp and LAKE MATERIALS
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between KakaoBank and LAKE is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and LAKE MATERIALS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAKE MATERIALS LTD and KakaoBank Corp 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 KakaoBank Corp are associated (or correlated) with LAKE MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAKE MATERIALS LTD has no effect on the direction of KakaoBank Corp i.e., KakaoBank Corp and LAKE MATERIALS go up and down completely randomly.
Pair Corralation between KakaoBank Corp and LAKE MATERIALS
Assuming the 90 days trading horizon KakaoBank Corp is expected to under-perform the LAKE MATERIALS. But the stock apears to be less risky and, when comparing its historical volatility, KakaoBank Corp is 1.49 times less risky than LAKE MATERIALS. The stock trades about -0.07 of its potential returns per unit of risk. The LAKE MATERIALS LTD is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,188,000 in LAKE MATERIALS LTD on October 30, 2024 and sell it today you would earn a total of 4,000 from holding LAKE MATERIALS LTD or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KakaoBank Corp vs. LAKE MATERIALS LTD
Performance |
| Timeline |
| KakaoBank Corp |
| LAKE MATERIALS LTD |
KakaoBank Corp and LAKE MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KakaoBank Corp and LAKE MATERIALS
The main advantage of trading using opposite KakaoBank Corp and LAKE MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp position performs unexpectedly, LAKE MATERIALS 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 LAKE MATERIALS will offset losses from the drop in LAKE MATERIALS's long position.| KakaoBank Corp vs. Shinhan Financial Group | KakaoBank Corp vs. Hana Financial | KakaoBank Corp vs. Woori Financial Group | KakaoBank Corp vs. Industrial Bank |
| LAKE MATERIALS vs. Sangsangin Investment Securities | LAKE MATERIALS vs. Seers Technology | LAKE MATERIALS vs. BIT Computer Co | LAKE MATERIALS vs. HB Technology TD |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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