Correlation Between Eagon Industrial and LG Household
Can any of the company-specific risk be diversified away by investing in both Eagon Industrial 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 Eagon Industrial and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagon Industrial Co and LG Household Healthcare, you can compare the effects of market volatilities on Eagon Industrial 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 Eagon Industrial with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagon Industrial and LG Household.
Diversification Opportunities for Eagon Industrial and LG Household
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eagon and 051905 is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Eagon Industrial 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 Eagon Industrial 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 Eagon Industrial 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 Eagon Industrial i.e., Eagon Industrial and LG Household go up and down completely randomly.
Pair Corralation between Eagon Industrial and LG Household
Assuming the 90 days trading horizon Eagon Industrial Co is expected to generate 1.43 times more return on investment than LG Household. However, Eagon Industrial is 1.43 times more volatile than LG Household Healthcare. It trades about -0.01 of its potential returns per unit of risk. LG Household Healthcare is currently generating about -0.02 per unit of risk. If you would invest 628,673 in Eagon Industrial Co on November 9, 2024 and sell it today you would lose (73,673) from holding Eagon Industrial Co or give up 11.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagon Industrial Co vs. LG Household Healthcare
Performance |
| Timeline |
| Eagon Industrial |
| LG Household Healthcare |
Eagon Industrial and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagon Industrial and LG Household
The main advantage of trading using opposite Eagon Industrial and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagon Industrial 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.| Eagon Industrial vs. Hankook Furniture Co | Eagon Industrial vs. UJU Electronics Co | Eagon Industrial vs. Aprogen Healthcare Games | Eagon Industrial vs. ABCO Electronics Co |
| LG Household vs. DC Media Co | LG Household vs. TJ media Co | LG Household vs. T3 Entertainment Co | LG Household vs. Heungkuk Metaltech CoLtd |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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