Correlation Between Lsb Industries and Ganfeng Lithium
Can any of the company-specific risk be diversified away by investing in both Lsb Industries and Ganfeng Lithium 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 Lsb Industries and Ganfeng Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lsb Industries and Ganfeng Lithium Co, you can compare the effects of market volatilities on Lsb Industries and Ganfeng Lithium 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 Lsb Industries with a short position of Ganfeng Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lsb Industries and Ganfeng Lithium.
Diversification Opportunities for Lsb Industries and Ganfeng Lithium
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lsb and Ganfeng is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lsb Industries and Ganfeng Lithium Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ganfeng Lithium and Lsb Industries 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 Lsb Industries are associated (or correlated) with Ganfeng Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ganfeng Lithium has no effect on the direction of Lsb Industries i.e., Lsb Industries and Ganfeng Lithium go up and down completely randomly.
Pair Corralation between Lsb Industries and Ganfeng Lithium
Considering the 90-day investment horizon Lsb Industries is expected to generate 0.66 times more return on investment than Ganfeng Lithium. However, Lsb Industries is 1.52 times less risky than Ganfeng Lithium. It trades about -0.02 of its potential returns per unit of risk. Ganfeng Lithium Co is currently generating about -0.03 per unit of risk. If you would invest 1,440 in Lsb Industries on September 3, 2024 and sell it today you would lose (557.00) from holding Lsb Industries or give up 38.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lsb Industries vs. Ganfeng Lithium Co
Performance |
| Timeline |
| Lsb Industries |
| Ganfeng Lithium |
Lsb Industries and Ganfeng Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lsb Industries and Ganfeng Lithium
The main advantage of trading using opposite Lsb Industries and Ganfeng Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lsb Industries position performs unexpectedly, Ganfeng Lithium 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 Ganfeng Lithium will offset losses from the drop in Ganfeng Lithium's long position.| Lsb Industries vs. Green Plains Renewable | Lsb Industries vs. AdvanSix | Lsb Industries vs. Tronox Holdings PLC | Lsb Industries vs. Methanex |
| Ganfeng Lithium vs. BioLargo | Ganfeng Lithium vs. Shin Etsu Chemical Co | Ganfeng Lithium vs. Lsb Industries | Ganfeng Lithium vs. Braskem SA Class |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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