Correlation Between ICD Co and LG Household
Can any of the company-specific risk be diversified away by investing in both ICD Co 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 ICD Co and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ICD Co and LG Household Healthcare, you can compare the effects of market volatilities on ICD Co 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 ICD Co with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICD Co and LG Household.
Diversification Opportunities for ICD Co and LG Household
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ICD and 051900 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ICD 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 ICD Co 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 ICD 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 ICD Co i.e., ICD Co and LG Household go up and down completely randomly.
Pair Corralation between ICD Co and LG Household
Assuming the 90 days trading horizon ICD Co is expected to generate 1.39 times more return on investment than LG Household. However, ICD Co is 1.39 times more volatile than LG Household Healthcare. It trades about 0.01 of its potential returns per unit of risk. LG Household Healthcare is currently generating about 0.01 per unit of risk. If you would invest 454,500 in ICD Co on September 13, 2024 and sell it today you would lose (2,500) from holding ICD Co or give up 0.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ICD Co vs. LG Household Healthcare
Performance |
| Timeline |
| ICD Co |
| LG Household Healthcare |
ICD Co and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ICD Co and LG Household
The main advantage of trading using opposite ICD Co and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICD Co 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.| ICD Co vs. SFA Engineering | ICD Co vs. APS Holdings | ICD Co vs. Soulbrain Holdings Co | ICD Co vs. JUSUNG ENGINEERING Co |
| LG Household vs. Adaptive Plasma Technology | LG Household vs. Sung Bo Chemicals | LG Household vs. Puloon Technology | LG Household vs. Woori Technology |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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