Correlation Between LS Materials and ATON
Can any of the company-specific risk be diversified away by investing in both LS Materials and ATON 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 ATON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LS Materials and ATON Inc, you can compare the effects of market volatilities on LS Materials and ATON 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 ATON. Check out your portfolio center. Please also check ongoing floating volatility patterns of LS Materials and ATON.
Diversification Opportunities for LS Materials and ATON
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 417200 and ATON is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding LS Materials and ATON Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATON Inc 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 ATON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATON Inc has no effect on the direction of LS Materials i.e., LS Materials and ATON go up and down completely randomly.
Pair Corralation between LS Materials and ATON
Assuming the 90 days trading horizon LS Materials is expected to under-perform the ATON. But the stock apears to be less risky and, when comparing its historical volatility, LS Materials is 2.75 times less risky than ATON. The stock trades about -0.39 of its potential returns per unit of risk. The ATON Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 408,000 in ATON Inc on August 25, 2024 and sell it today you would earn a total of 116,000 from holding ATON Inc or generate 28.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LS Materials vs. ATON Inc
Performance |
| Timeline |
| LS Materials |
| ATON Inc |
LS Materials and ATON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LS Materials and ATON
The main advantage of trading using opposite LS Materials and ATON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LS Materials position performs unexpectedly, ATON 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 ATON will offset losses from the drop in ATON'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 |
| ATON vs. Shinsegae Information Communication | ATON vs. Lotte Energy Materials | ATON vs. National Plastic Co | ATON 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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