Correlation Between CTCI Corp and LK Engineering
Can any of the company-specific risk be diversified away by investing in both CTCI Corp 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 CTCI Corp and LK Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CTCI Corp and LK Engineering Co, you can compare the effects of market volatilities on CTCI Corp 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 CTCI Corp with a short position of LK Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTCI Corp and LK Engineering.
Diversification Opportunities for CTCI Corp and LK Engineering
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between CTCI and 6139 is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding CTCI Corp and LK Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LK Engineering and CTCI Corp 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 CTCI Corp 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 CTCI Corp i.e., CTCI Corp and LK Engineering go up and down completely randomly.
Pair Corralation between CTCI Corp and LK Engineering
Assuming the 90 days trading horizon CTCI Corp is expected to under-perform the LK Engineering. But the stock apears to be less risky and, when comparing its historical volatility, CTCI Corp is 2.79 times less risky than LK Engineering. The stock trades about 0.0 of its potential returns per unit of risk. The LK Engineering Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,125 in LK Engineering Co on August 27, 2024 and sell it today you would earn a total of 19,075 from holding LK Engineering Co or generate 462.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CTCI Corp vs. LK Engineering Co
Performance |
| Timeline |
| CTCI Corp |
| LK Engineering |
CTCI Corp and LK Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CTCI Corp and LK Engineering
The main advantage of trading using opposite CTCI Corp and LK Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTCI Corp 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.| CTCI Corp vs. Taiwan Secom Co | CTCI Corp vs. Pou Chen Corp | CTCI Corp vs. Formosa Petrochemical Corp | CTCI Corp vs. Cheng Shin Rubber |
| LK Engineering vs. Sunny Friend Environmental | LK Engineering vs. TTET Union Corp | LK Engineering vs. ECOVE Environment Corp | LK Engineering 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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