Correlation Between Solution Advanced and Lion Chemtech
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and Lion Chemtech 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 Solution Advanced and Lion Chemtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and Lion Chemtech Co, you can compare the effects of market volatilities on Solution Advanced and Lion Chemtech 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 Solution Advanced with a short position of Lion Chemtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Lion Chemtech.
Diversification Opportunities for Solution Advanced and Lion Chemtech
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Solution and Lion is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Lion Chemtech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Chemtech and Solution Advanced 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 Solution Advanced Technology are associated (or correlated) with Lion Chemtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Chemtech has no effect on the direction of Solution Advanced i.e., Solution Advanced and Lion Chemtech go up and down completely randomly.
Pair Corralation between Solution Advanced and Lion Chemtech
Assuming the 90 days trading horizon Solution Advanced Technology is expected to under-perform the Lion Chemtech. In addition to that, Solution Advanced is 1.35 times more volatile than Lion Chemtech Co. It trades about -0.06 of its total potential returns per unit of risk. Lion Chemtech Co is currently generating about -0.07 per unit of volatility. If you would invest 415,860 in Lion Chemtech Co on September 12, 2024 and sell it today you would lose (181,860) from holding Lion Chemtech Co or give up 43.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. Lion Chemtech Co
Performance |
| Timeline |
| Solution Advanced |
| Lion Chemtech |
Solution Advanced and Lion Chemtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Lion Chemtech
The main advantage of trading using opposite Solution Advanced and Lion Chemtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, Lion Chemtech 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 Lion Chemtech will offset losses from the drop in Lion Chemtech's long position.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
| Lion Chemtech vs. Nature and Environment | Lion Chemtech vs. Cheryong Industrial CoLtd | Lion Chemtech vs. Solution Advanced Technology | Lion Chemtech vs. Busan Industrial 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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