Correlation Between Ecoplastic and LG Household
Can any of the company-specific risk be diversified away by investing in both Ecoplastic 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 Ecoplastic and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecoplastic and LG Household Healthcare, you can compare the effects of market volatilities on Ecoplastic 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 Ecoplastic with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecoplastic and LG Household.
Diversification Opportunities for Ecoplastic and LG Household
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ecoplastic and 051905 is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ecoplastic 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 Ecoplastic 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 Ecoplastic 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 Ecoplastic i.e., Ecoplastic and LG Household go up and down completely randomly.
Pair Corralation between Ecoplastic and LG Household
Assuming the 90 days trading horizon Ecoplastic is expected to generate 1.99 times more return on investment than LG Household. However, Ecoplastic is 1.99 times more volatile than LG Household Healthcare. It trades about 0.22 of its potential returns per unit of risk. LG Household Healthcare is currently generating about -0.58 per unit of risk. If you would invest 229,000 in Ecoplastic on October 30, 2024 and sell it today you would earn a total of 14,500 from holding Ecoplastic or generate 6.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecoplastic vs. LG Household Healthcare
Performance |
| Timeline |
| Ecoplastic |
| LG Household Healthcare |
Ecoplastic and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecoplastic and LG Household
The main advantage of trading using opposite Ecoplastic and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecoplastic 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.| Ecoplastic vs. Automobile Pc | Ecoplastic vs. Formetal Co | Ecoplastic vs. Industrial Bank | Ecoplastic vs. Kukil Metal Co |
| LG Household vs. Dongnam Chemical Co | LG Household vs. KPX Green Chemical | LG Household vs. Seoul Semiconductor Co | LG Household vs. Homecast CoLtd |
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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