Correlation Between Lohakit Metal and TMT Steel
Can any of the company-specific risk be diversified away by investing in both Lohakit Metal and TMT Steel 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 Lohakit Metal and TMT Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lohakit Metal Public and TMT Steel Public, you can compare the effects of market volatilities on Lohakit Metal and TMT Steel 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 Lohakit Metal with a short position of TMT Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lohakit Metal and TMT Steel.
Diversification Opportunities for Lohakit Metal and TMT Steel
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lohakit and TMT is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lohakit Metal Public and TMT Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMT Steel Public and Lohakit Metal 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 Lohakit Metal Public are associated (or correlated) with TMT Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMT Steel Public has no effect on the direction of Lohakit Metal i.e., Lohakit Metal and TMT Steel go up and down completely randomly.
Pair Corralation between Lohakit Metal and TMT Steel
Assuming the 90 days trading horizon Lohakit Metal Public is expected to generate 0.47 times more return on investment than TMT Steel. However, Lohakit Metal Public is 2.15 times less risky than TMT Steel. It trades about 0.1 of its potential returns per unit of risk. TMT Steel Public is currently generating about -0.96 per unit of risk. If you would invest 388.00 in Lohakit Metal Public on August 26, 2024 and sell it today you would earn a total of 4.00 from holding Lohakit Metal Public or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lohakit Metal Public vs. TMT Steel Public
Performance |
| Timeline |
| Lohakit Metal Public |
| TMT Steel Public |
Lohakit Metal and TMT Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lohakit Metal and TMT Steel
The main advantage of trading using opposite Lohakit Metal and TMT Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lohakit Metal position performs unexpectedly, TMT Steel 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 TMT Steel will offset losses from the drop in TMT Steel's long position.| Lohakit Metal vs. MCS Steel Public | Lohakit Metal vs. Asia Plus Group | Lohakit Metal vs. Lalin Property Public | Lohakit Metal vs. Lam Soon Public |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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