Correlation Between Lendlease and KOBE STEEL
Can any of the company-specific risk be diversified away by investing in both Lendlease and KOBE 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 Lendlease and KOBE STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and KOBE STEEL LTD, you can compare the effects of market volatilities on Lendlease and KOBE 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 Lendlease with a short position of KOBE STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and KOBE STEEL.
Diversification Opportunities for Lendlease and KOBE STEEL
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lendlease and KOBE is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group and KOBE STEEL LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KOBE STEEL LTD and Lendlease 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 Lendlease Group are associated (or correlated) with KOBE STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KOBE STEEL LTD has no effect on the direction of Lendlease i.e., Lendlease and KOBE STEEL go up and down completely randomly.
Pair Corralation between Lendlease and KOBE STEEL
Assuming the 90 days trading horizon Lendlease Group is expected to under-perform the KOBE STEEL. But the stock apears to be less risky and, when comparing its historical volatility, Lendlease Group is 1.05 times less risky than KOBE STEEL. The stock trades about -0.03 of its potential returns per unit of risk. The KOBE STEEL LTD is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,086 in KOBE STEEL LTD on November 2, 2024 and sell it today you would lose (57.00) from holding KOBE STEEL LTD or give up 5.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lendlease Group vs. KOBE STEEL LTD
Performance |
| Timeline |
| Lendlease Group |
| KOBE STEEL LTD |
Lendlease and KOBE STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and KOBE STEEL
The main advantage of trading using opposite Lendlease and KOBE STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease position performs unexpectedly, KOBE 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 KOBE STEEL will offset losses from the drop in KOBE STEEL's long position.| Lendlease vs. Phibro Animal Health | Lendlease vs. AOI Electronics Co | Lendlease vs. TT Electronics PLC | Lendlease vs. Renesas Electronics |
| KOBE STEEL vs. Molson Coors Beverage | KOBE STEEL vs. BOSTON BEER A | KOBE STEEL vs. ASPEN TECHINC DL | KOBE STEEL vs. PKSHA TECHNOLOGY INC |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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