Correlation Between LS Materials and PI Advanced
Can any of the company-specific risk be diversified away by investing in both LS Materials and PI Advanced 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 PI Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LS Materials and PI Advanced Materials, you can compare the effects of market volatilities on LS Materials and PI Advanced 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 PI Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of LS Materials and PI Advanced.
Diversification Opportunities for LS Materials and PI Advanced
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 417200 and 178920 is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding LS Materials and PI Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PI Advanced Materials 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 PI Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PI Advanced Materials has no effect on the direction of LS Materials i.e., LS Materials and PI Advanced go up and down completely randomly.
Pair Corralation between LS Materials and PI Advanced
Assuming the 90 days trading horizon LS Materials is expected to generate 2.35 times more return on investment than PI Advanced. However, LS Materials is 2.35 times more volatile than PI Advanced Materials. It trades about 0.1 of its potential returns per unit of risk. PI Advanced Materials is currently generating about -0.28 per unit of risk. If you would invest 1,222,000 in LS Materials on November 7, 2024 and sell it today you would earn a total of 103,000 from holding LS Materials or generate 8.43% 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. PI Advanced Materials
Performance |
| Timeline |
| LS Materials |
| PI Advanced Materials |
LS Materials and PI Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LS Materials and PI Advanced
The main advantage of trading using opposite LS Materials and PI Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LS Materials position performs unexpectedly, PI Advanced 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 PI Advanced will offset losses from the drop in PI Advanced's long position.| LS Materials vs. Daejung Chemicals Metals | LS Materials vs. Leaders Technology Investment | LS Materials vs. Woori Technology Investment | LS Materials vs. Stic Investments |
| PI Advanced vs. Lotte Fine Chemical | PI Advanced vs. Sempio Foods Co | PI Advanced vs. CKH Food Health | PI Advanced vs. Kukdo Chemical 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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