Correlation Between LEADCORP and LG Chemicals
Can any of the company-specific risk be diversified away by investing in both LEADCORP 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 LEADCORP and LG Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The LEADCORP and LG Chemicals, you can compare the effects of market volatilities on LEADCORP 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 LEADCORP with a short position of LG Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEADCORP and LG Chemicals.
Diversification Opportunities for LEADCORP and LG Chemicals
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LEADCORP and 051910 is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding The LEADCORP and LG Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chemicals and LEADCORP 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 The LEADCORP 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 LEADCORP i.e., LEADCORP and LG Chemicals go up and down completely randomly.
Pair Corralation between LEADCORP and LG Chemicals
Assuming the 90 days trading horizon The LEADCORP is expected to generate 0.43 times more return on investment than LG Chemicals. However, The LEADCORP is 2.34 times less risky than LG Chemicals. It trades about -0.1 of its potential returns per unit of risk. LG Chemicals is currently generating about -0.14 per unit of risk. If you would invest 403,834 in The LEADCORP on October 22, 2024 and sell it today you would lose (5,834) from holding The LEADCORP or give up 1.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The LEADCORP vs. LG Chemicals
Performance |
| Timeline |
| LEADCORP |
| LG Chemicals |
LEADCORP and LG Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEADCORP and LG Chemicals
The main advantage of trading using opposite LEADCORP and LG Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEADCORP 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.| LEADCORP vs. DONGKUK TED METAL | LEADCORP vs. PJ Metal Co | LEADCORP vs. Kukil Metal Co | LEADCORP vs. Dongil Metal Co |
| LG Chemicals vs. SK Chemicals Co | LG Chemicals vs. Sangsin Energy Display | LG Chemicals vs. Hannong Chemicals | LG Chemicals vs. Polaris Office Corp |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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