Correlation Between Stic Investments and LB Investment
Can any of the company-specific risk be diversified away by investing in both Stic Investments 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 Stic Investments and LB Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stic Investments and LB Investment, you can compare the effects of market volatilities on Stic Investments 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 Stic Investments with a short position of LB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stic Investments and LB Investment.
Diversification Opportunities for Stic Investments and LB Investment
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stic and 309960 is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Stic Investments and LB Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Investment and Stic Investments 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 Stic Investments 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 Stic Investments i.e., Stic Investments and LB Investment go up and down completely randomly.
Pair Corralation between Stic Investments and LB Investment
Assuming the 90 days trading horizon Stic Investments is expected to generate 0.67 times more return on investment than LB Investment. However, Stic Investments is 1.49 times less risky than LB Investment. It trades about 0.04 of its potential returns per unit of risk. LB Investment is currently generating about -0.05 per unit of risk. If you would invest 595,275 in Stic Investments on November 2, 2024 and sell it today you would earn a total of 222,725 from holding Stic Investments or generate 37.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 93.53% |
| Values | Daily Returns |
Stic Investments vs. LB Investment
Performance |
| Timeline |
| Stic Investments |
| LB Investment |
Stic Investments and LB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stic Investments and LB Investment
The main advantage of trading using opposite Stic Investments and LB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stic Investments 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.| Stic Investments vs. Samyang Foods Co | Stic Investments vs. Jeju Air Co | Stic Investments vs. Genie Music | Stic Investments vs. Haitai Confectionery Foods |
| LB Investment vs. Digital Multimedia Technology | LB Investment vs. MEDIANA CoLtd | LB Investment vs. INFINITT Healthcare Co | LB Investment vs. Aprogen Healthcare Games |
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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