Correlation Between LS Materials and Eagle Veterinary
Can any of the company-specific risk be diversified away by investing in both LS Materials and Eagle Veterinary 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 Eagle Veterinary into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LS Materials and Eagle Veterinary Technology, you can compare the effects of market volatilities on LS Materials and Eagle Veterinary 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 Eagle Veterinary. Check out your portfolio center. Please also check ongoing floating volatility patterns of LS Materials and Eagle Veterinary.
Diversification Opportunities for LS Materials and Eagle Veterinary
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 417200 and Eagle is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding LS Materials and Eagle Veterinary Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Veterinary Tec 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 Eagle Veterinary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Veterinary Tec has no effect on the direction of LS Materials i.e., LS Materials and Eagle Veterinary go up and down completely randomly.
Pair Corralation between LS Materials and Eagle Veterinary
Assuming the 90 days trading horizon LS Materials is expected to generate 3.66 times more return on investment than Eagle Veterinary. However, LS Materials is 3.66 times more volatile than Eagle Veterinary Technology. It trades about 0.14 of its potential returns per unit of risk. Eagle Veterinary Technology is currently generating about -0.11 per unit of risk. If you would invest 1,185,000 in LS Materials on November 3, 2024 and sell it today you would earn a total of 140,000 from holding LS Materials or generate 11.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LS Materials vs. Eagle Veterinary Technology
Performance |
| Timeline |
| LS Materials |
| Eagle Veterinary Tec |
LS Materials and Eagle Veterinary Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LS Materials and Eagle Veterinary
The main advantage of trading using opposite LS Materials and Eagle Veterinary positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LS Materials position performs unexpectedly, Eagle Veterinary 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 Eagle Veterinary will offset losses from the drop in Eagle Veterinary's long position.| LS Materials vs. Daejung Chemicals Metals | LS Materials vs. Dongil Metal Co | LS Materials vs. INNOX Advanced Materials | LS Materials vs. Ssangyong Materials Corp |
| Eagle Veterinary vs. Solution Advanced Technology | Eagle Veterinary vs. SS TECH | Eagle Veterinary vs. Dongil Metal Co | Eagle Veterinary vs. A Tech Solution 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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