Correlation Between Union Materials and LB Investment
Can any of the company-specific risk be diversified away by investing in both Union Materials and LB Investment 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 Union Materials and LB Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Materials Corp and LB Investment, you can compare the effects of market volatilities on Union Materials and LB Investment 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 Union Materials with a short position of LB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Materials and LB Investment.
Diversification Opportunities for Union Materials and LB Investment
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Union and 309960 is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Union Materials Corp and LB Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Investment and Union Materials 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 Union Materials Corp are associated (or correlated) with LB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Investment has no effect on the direction of Union Materials i.e., Union Materials and LB Investment go up and down completely randomly.
Pair Corralation between Union Materials and LB Investment
Assuming the 90 days trading horizon Union Materials is expected to generate 6.41 times less return on investment than LB Investment. But when comparing it to its historical volatility, Union Materials Corp is 2.07 times less risky than LB Investment. It trades about 0.08 of its potential returns per unit of risk. LB Investment is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 310,000 in LB Investment on November 27, 2024 and sell it today you would earn a total of 107,000 from holding LB Investment or generate 34.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Materials Corp vs. LB Investment
Performance |
| Timeline |
| Union Materials Corp |
| LB Investment |
Union Materials and LB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Materials and LB Investment
The main advantage of trading using opposite Union Materials and LB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Materials position performs unexpectedly, LB Investment 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 LB Investment will offset losses from the drop in LB Investment's long position.| Union Materials vs. InnoTherapy | Union Materials vs. NewFlex Technology Co | Union Materials vs. AeroSpace Technology of | Union Materials vs. Puloon Technology |
| LB Investment vs. Dongil Metal Co | LB Investment vs. Industrial Bank | LB Investment vs. Finebesteel | LB Investment vs. Songwon Industrial Co |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |