Correlation Between National Plastic and LG Household
Can any of the company-specific risk be diversified away by investing in both National Plastic and LG Household 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 National Plastic and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Plastic Co and LG Household Healthcare, you can compare the effects of market volatilities on National Plastic and LG Household 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 National Plastic with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Plastic and LG Household.
Diversification Opportunities for National Plastic and LG Household
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and 051900 is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding National Plastic Co and LG Household Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Household Healthcare and National Plastic 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 National Plastic Co are associated (or correlated) with LG Household. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Household Healthcare has no effect on the direction of National Plastic i.e., National Plastic and LG Household go up and down completely randomly.
Pair Corralation between National Plastic and LG Household
Assuming the 90 days trading horizon National Plastic Co is expected to generate 0.54 times more return on investment than LG Household. However, National Plastic Co is 1.87 times less risky than LG Household. It trades about -0.11 of its potential returns per unit of risk. LG Household Healthcare is currently generating about -0.11 per unit of risk. If you would invest 271,500 in National Plastic Co on August 29, 2024 and sell it today you would lose (10,500) from holding National Plastic Co or give up 3.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Plastic Co vs. LG Household Healthcare
Performance |
| Timeline |
| National Plastic |
| LG Household Healthcare |
National Plastic and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Plastic and LG Household
The main advantage of trading using opposite National Plastic and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Plastic position performs unexpectedly, LG Household 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 LG Household will offset losses from the drop in LG Household's long position.| National Plastic vs. Busan Industrial Co | National Plastic vs. Busan Ind | National Plastic vs. Shinhan WTI Futures | National Plastic vs. Finebesteel |
| LG Household vs. Samsung Electronics Co | LG Household vs. Samsung Electronics Co | LG Household vs. Hyundai Motor Co | LG Household vs. Hyundai Motor |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Stocks Directory Find actively traded stocks across global markets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |