Correlation Between LK Engineering and United Integrated
Can any of the company-specific risk be diversified away by investing in both LK Engineering and United Integrated 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 LK Engineering and United Integrated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LK Engineering Co and United Integrated Services, you can compare the effects of market volatilities on LK Engineering and United Integrated 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 LK Engineering with a short position of United Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of LK Engineering and United Integrated.
Diversification Opportunities for LK Engineering and United Integrated
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between 6139 and United is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding LK Engineering Co and United Integrated Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Integrated and LK Engineering 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 LK Engineering Co are associated (or correlated) with United Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Integrated has no effect on the direction of LK Engineering i.e., LK Engineering and United Integrated go up and down completely randomly.
Pair Corralation between LK Engineering and United Integrated
Assuming the 90 days trading horizon LK Engineering is expected to generate 8.76 times less return on investment than United Integrated. But when comparing it to its historical volatility, LK Engineering Co is 1.02 times less risky than United Integrated. It trades about 0.04 of its potential returns per unit of risk. United Integrated Services is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 34,350 in United Integrated Services on August 27, 2024 and sell it today you would earn a total of 6,500 from holding United Integrated Services or generate 18.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LK Engineering Co vs. United Integrated Services
Performance |
| Timeline |
| LK Engineering |
| United Integrated |
LK Engineering and United Integrated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LK Engineering and United Integrated
The main advantage of trading using opposite LK Engineering and United Integrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LK Engineering position performs unexpectedly, United Integrated 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 United Integrated will offset losses from the drop in United Integrated's long position.| LK Engineering vs. Sunny Friend Environmental | LK Engineering vs. TTET Union Corp | LK Engineering vs. ECOVE Environment Corp | LK Engineering vs. Yulon Finance Corp |
| United Integrated vs. Sunny Friend Environmental | United Integrated vs. TTET Union Corp | United Integrated vs. ECOVE Environment Corp | United Integrated vs. Yulon Finance Corp |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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