Correlation Between LS Materials and Korea New
Can any of the company-specific risk be diversified away by investing in both LS Materials and Korea New 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 Korea New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LS Materials and Korea New Network, you can compare the effects of market volatilities on LS Materials and Korea New 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 Korea New. Check out your portfolio center. Please also check ongoing floating volatility patterns of LS Materials and Korea New.
Diversification Opportunities for LS Materials and Korea New
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 417200 and Korea is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding LS Materials and Korea New Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea New Network 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 Korea New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea New Network has no effect on the direction of LS Materials i.e., LS Materials and Korea New go up and down completely randomly.
Pair Corralation between LS Materials and Korea New
Assuming the 90 days trading horizon LS Materials is expected to under-perform the Korea New. In addition to that, LS Materials is 1.5 times more volatile than Korea New Network. It trades about -0.34 of its total potential returns per unit of risk. Korea New Network is currently generating about -0.04 per unit of volatility. If you would invest 80,000 in Korea New Network on August 29, 2024 and sell it today you would lose (1,900) from holding Korea New Network or give up 2.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LS Materials vs. Korea New Network
Performance |
| Timeline |
| LS Materials |
| Korea New Network |
LS Materials and Korea New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LS Materials and Korea New
The main advantage of trading using opposite LS Materials and Korea New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LS Materials position performs unexpectedly, Korea New 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 Korea New will offset losses from the drop in Korea New'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 |
| Korea New vs. Hyundai Engineering Plastics | Korea New vs. Dongwon Metal Co | Korea New vs. Taeyang Metal Industrial | Korea New vs. LS Materials |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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