Correlation Between LK Engineering and General Plastic
Can any of the company-specific risk be diversified away by investing in both LK Engineering and General Plastic 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 General Plastic 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 General Plastic Industrial, you can compare the effects of market volatilities on LK Engineering and General Plastic 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 General Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of LK Engineering and General Plastic.
Diversification Opportunities for LK Engineering and General Plastic
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 6139 and General is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding LK Engineering Co and General Plastic Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Plastic Indu 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 General Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Plastic Indu has no effect on the direction of LK Engineering i.e., LK Engineering and General Plastic go up and down completely randomly.
Pair Corralation between LK Engineering and General Plastic
Assuming the 90 days trading horizon LK Engineering Co is expected to generate 2.84 times more return on investment than General Plastic. However, LK Engineering is 2.84 times more volatile than General Plastic Industrial. It trades about 0.21 of its potential returns per unit of risk. General Plastic Industrial is currently generating about 0.37 per unit of risk. If you would invest 25,000 in LK Engineering Co on December 1, 2024 and sell it today you would earn a total of 2,400 from holding LK Engineering Co or generate 9.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LK Engineering Co vs. General Plastic Industrial
Performance |
| Timeline |
| LK Engineering |
| General Plastic Indu |
LK Engineering and General Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LK Engineering and General Plastic
The main advantage of trading using opposite LK Engineering and General Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LK Engineering position performs unexpectedly, General Plastic 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 General Plastic will offset losses from the drop in General Plastic's long position.| LK Engineering vs. United Integrated Services | LK Engineering vs. Topco Scientific Co | LK Engineering vs. Marketech International Corp | LK Engineering vs. Asia Optical Co |
| General Plastic vs. I Sheng Electric Wire | General Plastic vs. LK Engineering Co | General Plastic vs. Aten International Co | General Plastic vs. Flytech Technology 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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