Correlation Between Orbitech and LG Chem
Can any of the company-specific risk be diversified away by investing in both Orbitech 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 Orbitech and LG Chem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orbitech Co and LG Chem, you can compare the effects of market volatilities on Orbitech 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 Orbitech with a short position of LG Chem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orbitech and LG Chem.
Diversification Opportunities for Orbitech and LG Chem
Very weak diversification
The 3 months correlation between Orbitech and 051915 is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Orbitech Co and LG Chem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chem and Orbitech 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 Orbitech Co 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 Orbitech i.e., Orbitech and LG Chem go up and down completely randomly.
Pair Corralation between Orbitech and LG Chem
Assuming the 90 days trading horizon Orbitech Co is expected to generate 1.28 times more return on investment than LG Chem. However, Orbitech is 1.28 times more volatile than LG Chem. It trades about -0.03 of its potential returns per unit of risk. LG Chem is currently generating about -0.05 per unit of risk. If you would invest 473,000 in Orbitech Co on October 28, 2024 and sell it today you would lose (233,500) from holding Orbitech Co or give up 49.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orbitech Co vs. LG Chem
Performance |
| Timeline |
| Orbitech |
| LG Chem |
Orbitech and LG Chem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orbitech and LG Chem
The main advantage of trading using opposite Orbitech and LG Chem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orbitech 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.| Orbitech vs. LS Materials | Orbitech vs. Lake Materials Co | Orbitech vs. Kolon Plastics | Orbitech vs. Ssangyong Materials Corp |
| LG Chem vs. Chunbo Co | LG Chem vs. DukSan Neolux CoLtd | LG Chem vs. Hyosung Chemical Corp | LG Chem vs. LIG ES SPAC |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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