Correlation Between National Plastic and LB Investment
Can any of the company-specific risk be diversified away by investing in both National Plastic and LB Investment 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 LB Investment 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 LB Investment, you can compare the effects of market volatilities on National Plastic and LB Investment 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 LB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Plastic and LB Investment.
Diversification Opportunities for National Plastic and LB Investment
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and 309960 is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding National Plastic Co and LB Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Investment 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 LB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Investment has no effect on the direction of National Plastic i.e., National Plastic and LB Investment go up and down completely randomly.
Pair Corralation between National Plastic and LB Investment
Assuming the 90 days trading horizon National Plastic Co is expected to generate 1.63 times more return on investment than LB Investment. However, National Plastic is 1.63 times more volatile than LB Investment. It trades about -0.07 of its potential returns per unit of risk. LB Investment is currently generating about -0.2 per unit of risk. If you would invest 267,000 in National Plastic Co on September 1, 2024 and sell it today you would lose (7,000) from holding National Plastic Co or give up 2.62% 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. LB Investment
Performance |
| Timeline |
| National Plastic |
| LB Investment |
National Plastic and LB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Plastic and LB Investment
The main advantage of trading using opposite National Plastic and LB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Plastic position performs unexpectedly, LB Investment 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 LB Investment will offset losses from the drop in LB Investment's long position.| National Plastic vs. Hyundai Engineering Plastics | National Plastic vs. INNOX Advanced Materials | National Plastic vs. Eagon Industrial Co | National Plastic vs. Samhwa Paint Industrial |
| LB Investment vs. iNtRON Biotechnology | LB Investment vs. BGF Retail Co | LB Investment vs. Daishin Information Communications | LB Investment vs. Shinsegae Information Communication |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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