Correlation Between Jeong Moon and LG Household
Can any of the company-specific risk be diversified away by investing in both Jeong Moon 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 Jeong Moon and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeong Moon Information and LG Household Healthcare, you can compare the effects of market volatilities on Jeong Moon 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 Jeong Moon with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeong Moon and LG Household.
Diversification Opportunities for Jeong Moon and LG Household
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Jeong and 051900 is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Jeong Moon Information 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 Jeong Moon 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 Jeong Moon Information 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 Jeong Moon i.e., Jeong Moon and LG Household go up and down completely randomly.
Pair Corralation between Jeong Moon and LG Household
Assuming the 90 days trading horizon Jeong Moon Information is expected to generate 0.78 times more return on investment than LG Household. However, Jeong Moon Information is 1.28 times less risky than LG Household. It trades about -0.03 of its potential returns per unit of risk. LG Household Healthcare is currently generating about -0.06 per unit of risk. If you would invest 121,000 in Jeong Moon Information on November 5, 2024 and sell it today you would lose (37,800) from holding Jeong Moon Information or give up 31.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeong Moon Information vs. LG Household Healthcare
Performance |
| Timeline |
| Jeong Moon Information |
| LG Household Healthcare |
Jeong Moon and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeong Moon and LG Household
The main advantage of trading using opposite Jeong Moon and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeong Moon 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.| Jeong Moon vs. INFINITT Healthcare Co | Jeong Moon vs. Homecast CoLtd | Jeong Moon vs. Aprogen Healthcare Games | Jeong Moon vs. Handok Clean Tech |
| LG Household vs. Digital Multimedia Technology | LG Household vs. Barunson Entertainment Arts | LG Household vs. LG Display Co | LG Household vs. Grand Korea Leisure |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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