Correlation Between LS Materials and Sung Bo
Can any of the company-specific risk be diversified away by investing in both LS Materials and Sung Bo 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 LS Materials and Sung Bo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LS Materials and Sung Bo Chemicals, you can compare the effects of market volatilities on LS Materials and Sung Bo 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 LS Materials with a short position of Sung Bo. Check out your portfolio center. Please also check ongoing floating volatility patterns of LS Materials and Sung Bo.
Diversification Opportunities for LS Materials and Sung Bo
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between 417200 and Sung is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding LS Materials and Sung Bo Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sung Bo Chemicals and LS 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 LS Materials are associated (or correlated) with Sung Bo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sung Bo Chemicals has no effect on the direction of LS Materials i.e., LS Materials and Sung Bo go up and down completely randomly.
Pair Corralation between LS Materials and Sung Bo
Assuming the 90 days trading horizon LS Materials is expected to generate 12.26 times more return on investment than Sung Bo. However, LS Materials is 12.26 times more volatile than Sung Bo Chemicals. It trades about 0.05 of its potential returns per unit of risk. Sung Bo Chemicals is currently generating about -0.02 per unit of risk. If you would invest 599,449 in LS Materials on September 12, 2024 and sell it today you would earn a total of 410,551 from holding LS Materials or generate 68.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 50.83% |
| Values | Daily Returns |
LS Materials vs. Sung Bo Chemicals
Performance |
| Timeline |
| LS Materials |
| Sung Bo Chemicals |
LS Materials and Sung Bo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LS Materials and Sung Bo
The main advantage of trading using opposite LS Materials and Sung Bo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LS Materials position performs unexpectedly, Sung Bo 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 Sung Bo will offset losses from the drop in Sung Bo's long position.| LS Materials vs. Samsung Electronics Co | LS Materials vs. Samsung Electronics Co | LS Materials vs. LG Energy Solution | LS Materials vs. SK Hynix |
| Sung Bo vs. LS Materials | Sung Bo vs. Organic Special Pet | Sung Bo vs. Hyundai Engineering Plastics | Sung Bo vs. Phoenix 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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