Correlation Between LS Materials and INNOX Advanced
Can any of the company-specific risk be diversified away by investing in both LS Materials and INNOX 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 INNOX 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 INNOX Advanced Materials, you can compare the effects of market volatilities on LS Materials and INNOX 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 INNOX Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of LS Materials and INNOX Advanced.
Diversification Opportunities for LS Materials and INNOX Advanced
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 417200 and INNOX is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding LS Materials and INNOX Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INNOX 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 INNOX Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INNOX Advanced Materials has no effect on the direction of LS Materials i.e., LS Materials and INNOX Advanced go up and down completely randomly.
Pair Corralation between LS Materials and INNOX Advanced
Assuming the 90 days trading horizon LS Materials is expected to generate 2.47 times less return on investment than INNOX Advanced. In addition to that, LS Materials is 1.26 times more volatile than INNOX Advanced Materials. It trades about 0.1 of its total potential returns per unit of risk. INNOX Advanced Materials is currently generating about 0.3 per unit of volatility. If you would invest 2,325,000 in INNOX Advanced Materials on November 9, 2024 and sell it today you would earn a total of 595,000 from holding INNOX Advanced Materials or generate 25.59% 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. INNOX Advanced Materials
Performance |
| Timeline |
| LS Materials |
| INNOX Advanced Materials |
LS Materials and INNOX Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LS Materials and INNOX Advanced
The main advantage of trading using opposite LS Materials and INNOX Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LS Materials position performs unexpectedly, INNOX 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 INNOX Advanced will offset losses from the drop in INNOX Advanced'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 |
| INNOX Advanced vs. SK Hynix | INNOX Advanced vs. LX Semicon Co | INNOX Advanced vs. Tokai Carbon Korea | INNOX Advanced vs. People Technology |
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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