Correlation Between Aten International and LK Engineering
Can any of the company-specific risk be diversified away by investing in both Aten International and LK Engineering 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 Aten International and LK Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aten International Co and LK Engineering Co, you can compare the effects of market volatilities on Aten International and LK Engineering 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 Aten International with a short position of LK Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aten International and LK Engineering.
Diversification Opportunities for Aten International and LK Engineering
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aten and 6139 is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Aten International Co and LK Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LK Engineering and Aten International 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 Aten International Co are associated (or correlated) with LK Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LK Engineering has no effect on the direction of Aten International i.e., Aten International and LK Engineering go up and down completely randomly.
Pair Corralation between Aten International and LK Engineering
Assuming the 90 days trading horizon Aten International Co is expected to under-perform the LK Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Aten International Co is 6.19 times less risky than LK Engineering. The stock trades about -0.02 of its potential returns per unit of risk. The LK Engineering Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 6,040 in LK Engineering Co on September 2, 2024 and sell it today you would earn a total of 16,960 from holding LK Engineering Co or generate 280.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Aten International Co vs. LK Engineering Co
Performance |
| Timeline |
| Aten International |
| LK Engineering |
Aten International and LK Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aten International and LK Engineering
The main advantage of trading using opposite Aten International and LK Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aten International position performs unexpectedly, LK Engineering 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 LK Engineering will offset losses from the drop in LK Engineering's long position.| Aten International vs. Flytech Technology Co | Aten International vs. Topco Scientific Co | Aten International vs. Chicony Electronics Co | Aten International vs. Advantech Co |
| LK Engineering vs. United Integrated Services | LK Engineering vs. Topco Scientific Co | LK Engineering vs. Marketech International Corp | LK Engineering vs. Asia Optical 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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