Correlation Between Lai Sun and Marine Products
Can any of the company-specific risk be diversified away by investing in both Lai Sun and Marine Products 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 Lai Sun and Marine Products into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lai Sun Garment and Marine Products, you can compare the effects of market volatilities on Lai Sun and Marine Products 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 Lai Sun with a short position of Marine Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lai Sun and Marine Products.
Diversification Opportunities for Lai Sun and Marine Products
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lai and Marine is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Lai Sun Garment and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Products and Lai Sun 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 Lai Sun Garment are associated (or correlated) with Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of Lai Sun i.e., Lai Sun and Marine Products go up and down completely randomly.
Pair Corralation between Lai Sun and Marine Products
Assuming the 90 days horizon Lai Sun Garment is expected to under-perform the Marine Products. In addition to that, Lai Sun is 2.03 times more volatile than Marine Products. It trades about -0.08 of its total potential returns per unit of risk. Marine Products is currently generating about 0.03 per unit of volatility. If you would invest 891.00 in Marine Products on September 14, 2024 and sell it today you would earn a total of 80.22 from holding Marine Products or generate 9.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lai Sun Garment vs. Marine Products
Performance |
| Timeline |
| Lai Sun Garment |
| Marine Products |
Lai Sun and Marine Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lai Sun and Marine Products
The main advantage of trading using opposite Lai Sun and Marine Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lai Sun position performs unexpectedly, Marine Products 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 Marine Products will offset losses from the drop in Marine Products' long position.The idea behind Lai Sun Garment and Marine Products pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Marine Products vs. Thor Industries | Marine Products vs. BRP Inc | Marine Products vs. Brunswick | Marine Products vs. EZGO Technologies |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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