Correlation Between Ecoplastic and LG Chem
Can any of the company-specific risk be diversified away by investing in both Ecoplastic and LG Chem 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 Chem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecoplastic and LG Chem, you can compare the effects of market volatilities on Ecoplastic and LG Chem 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 Chem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecoplastic and LG Chem.
Diversification Opportunities for Ecoplastic and LG Chem
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ecoplastic and 051915 is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ecoplastic and LG Chem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chem 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 Chem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chem has no effect on the direction of Ecoplastic i.e., Ecoplastic and LG Chem go up and down completely randomly.
Pair Corralation between Ecoplastic and LG Chem
Assuming the 90 days trading horizon Ecoplastic is expected to generate 0.7 times more return on investment than LG Chem. However, Ecoplastic is 1.43 times less risky than LG Chem. It trades about -0.01 of its potential returns per unit of risk. LG Chem is currently generating about -0.51 per unit of risk. If you would invest 241,000 in Ecoplastic on November 7, 2024 and sell it today you would lose (1,000.00) from holding Ecoplastic or give up 0.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Ecoplastic vs. LG Chem
Performance |
| Timeline |
| Ecoplastic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| LG Chem |
Ecoplastic and LG Chem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecoplastic and LG Chem
The main advantage of trading using opposite Ecoplastic and LG Chem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecoplastic position performs unexpectedly, LG Chem 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 Chem will offset losses from the drop in LG Chem's long position.| Ecoplastic vs. INNOX Advanced Materials | Ecoplastic vs. Mobileleader CoLtd | Ecoplastic vs. Pan Entertainment Co | Ecoplastic vs. Hankukpackage Co |
| LG Chem vs. Hana Financial | LG Chem vs. SK Chemicals Co | LG Chem vs. Choil Aluminum | LG Chem vs. Genie Music |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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