Correlation Between Moonbae Steel and LG Chemicals
Can any of the company-specific risk be diversified away by investing in both Moonbae Steel and LG Chemicals 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 Moonbae Steel and LG Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moonbae Steel and LG Chemicals, you can compare the effects of market volatilities on Moonbae Steel and LG Chemicals 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 Moonbae Steel with a short position of LG Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moonbae Steel and LG Chemicals.
Diversification Opportunities for Moonbae Steel and LG Chemicals
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Moonbae and 051910 is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Moonbae Steel and LG Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chemicals and Moonbae 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 Moonbae Steel are associated (or correlated) with LG Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chemicals has no effect on the direction of Moonbae Steel i.e., Moonbae Steel and LG Chemicals go up and down completely randomly.
Pair Corralation between Moonbae Steel and LG Chemicals
Assuming the 90 days trading horizon Moonbae Steel is expected to generate 1.07 times more return on investment than LG Chemicals. However, Moonbae Steel is 1.07 times more volatile than LG Chemicals. It trades about 0.18 of its potential returns per unit of risk. LG Chemicals is currently generating about -0.14 per unit of risk. If you would invest 228,000 in Moonbae Steel on August 25, 2024 and sell it today you would earn a total of 27,000 from holding Moonbae Steel or generate 11.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moonbae Steel vs. LG Chemicals
Performance |
| Timeline |
| Moonbae Steel |
| LG Chemicals |
Moonbae Steel and LG Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moonbae Steel and LG Chemicals
The main advantage of trading using opposite Moonbae Steel and LG Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moonbae Steel position performs unexpectedly, LG Chemicals 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 Chemicals will offset losses from the drop in LG Chemicals' long position.| Moonbae Steel vs. LG Chemicals | Moonbae Steel vs. POSCO Holdings | Moonbae Steel vs. Lotte Chemical Corp | Moonbae Steel vs. Hyundai Steel |
| LG Chemicals vs. POSCO Holdings | LG Chemicals vs. Lotte Chemical Corp | LG Chemicals vs. Hyundai Steel | LG Chemicals vs. Dongkuk Steel Mill |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |