Correlation Between J Steel and LG Household
Can any of the company-specific risk be diversified away by investing in both J Steel 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 J Steel and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between J Steel Co and LG Household Healthcare, you can compare the effects of market volatilities on J Steel 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 J Steel with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Steel and LG Household.
Diversification Opportunities for J Steel and LG Household
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 023440 and 051905 is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding J Steel 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 J 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 J Steel 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 J Steel i.e., J Steel and LG Household go up and down completely randomly.
Pair Corralation between J Steel and LG Household
Assuming the 90 days trading horizon J Steel Co is expected to generate 2.39 times more return on investment than LG Household. However, J Steel is 2.39 times more volatile than LG Household Healthcare. It trades about 0.0 of its potential returns per unit of risk. LG Household Healthcare is currently generating about -0.07 per unit of risk. If you would invest 261,000 in J Steel Co on October 27, 2024 and sell it today you would lose (106,000) from holding J Steel Co or give up 40.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
J Steel Co vs. LG Household Healthcare
Performance |
| Timeline |
| J Steel |
| LG Household Healthcare |
J Steel and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J Steel and LG Household
The main advantage of trading using opposite J Steel and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J Steel 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.| J Steel vs. Samsung Electronics Co | J Steel vs. Samsung Electronics Co | J Steel vs. LG Energy Solution | J Steel vs. SK Hynix |
| LG Household vs. Sangsangin Investment Securities | LG Household vs. Daiyang Metal Co | LG Household vs. Shinhan Inverse Copper | LG Household vs. Golden Bridge Investment |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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