Correlation Between FOODWELL and LG Household
Can any of the company-specific risk be diversified away by investing in both FOODWELL 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 FOODWELL and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FOODWELL Co and LG Household Healthcare, you can compare the effects of market volatilities on FOODWELL 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 FOODWELL with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of FOODWELL and LG Household.
Diversification Opportunities for FOODWELL and LG Household
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FOODWELL and 051900 is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding FOODWELL 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 FOODWELL 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 FOODWELL 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 FOODWELL i.e., FOODWELL and LG Household go up and down completely randomly.
Pair Corralation between FOODWELL and LG Household
Assuming the 90 days trading horizon FOODWELL Co is expected to generate 0.84 times more return on investment than LG Household. However, FOODWELL Co is 1.19 times less risky than LG Household. It trades about 0.03 of its potential returns per unit of risk. LG Household Healthcare is currently generating about 0.01 per unit of risk. If you would invest 476,458 in FOODWELL Co on November 3, 2024 and sell it today you would earn a total of 37,542 from holding FOODWELL Co or generate 7.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FOODWELL Co vs. LG Household Healthcare
Performance |
| Timeline |
| FOODWELL |
| LG Household Healthcare |
FOODWELL and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FOODWELL and LG Household
The main advantage of trading using opposite FOODWELL and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FOODWELL 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.| FOODWELL vs. Cloud Air CoLtd | FOODWELL vs. V One Tech Co | FOODWELL vs. PH Tech Co | FOODWELL vs. Tway Air Co |
| LG Household vs. DONGKUK TED METAL | LG Household vs. Daejung Chemicals Metals | LG Household vs. Dongbang Transport Logistics | LG Household vs. Kukil Metal Co |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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