Correlation Between Ni Steel and LB Investment
Can any of the company-specific risk be diversified away by investing in both Ni Steel 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 Ni Steel and LB Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ni Steel and LB Investment, you can compare the effects of market volatilities on Ni Steel 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 Ni Steel with a short position of LB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ni Steel and LB Investment.
Diversification Opportunities for Ni Steel and LB Investment
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 008260 and 309960 is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ni Steel and LB Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Investment and Ni Steel 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 Ni Steel 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 Ni Steel i.e., Ni Steel and LB Investment go up and down completely randomly.
Pair Corralation between Ni Steel and LB Investment
Assuming the 90 days trading horizon Ni Steel is expected to generate 3.64 times more return on investment than LB Investment. However, Ni Steel is 3.64 times more volatile than LB Investment. It trades about 0.04 of its potential returns per unit of risk. LB Investment is currently generating about -0.2 per unit of risk. If you would invest 370,500 in Ni Steel on August 31, 2024 and sell it today you would earn a total of 7,000 from holding Ni Steel or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ni Steel vs. LB Investment
Performance |
| Timeline |
| Ni Steel |
| LB Investment |
Ni Steel and LB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ni Steel and LB Investment
The main advantage of trading using opposite Ni Steel and LB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ni Steel 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.| Ni Steel vs. Dong Il Steel | Ni Steel vs. Seah Steel Corp | Ni Steel vs. Ajusteel Co | Ni Steel vs. Korea Steel Co |
| LB Investment vs. Samsung Electronics Co | LB Investment vs. Samsung Electronics Co | LB Investment vs. LG Energy Solution | LB Investment vs. SK Hynix |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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