Correlation Between LG Household and Eagon Industrial
Can any of the company-specific risk be diversified away by investing in both LG Household and Eagon Industrial 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 LG Household and Eagon Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Household Healthcare and Eagon Industrial Co, you can compare the effects of market volatilities on LG Household and Eagon Industrial 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 LG Household with a short position of Eagon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Eagon Industrial.
Diversification Opportunities for LG Household and Eagon Industrial
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 051900 and Eagon is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Eagon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagon Industrial and LG Household 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 LG Household Healthcare are associated (or correlated) with Eagon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagon Industrial has no effect on the direction of LG Household i.e., LG Household and Eagon Industrial go up and down completely randomly.
Pair Corralation between LG Household and Eagon Industrial
Assuming the 90 days trading horizon LG Household Healthcare is expected to under-perform the Eagon Industrial. But the stock apears to be less risky and, when comparing its historical volatility, LG Household Healthcare is 6.84 times less risky than Eagon Industrial. The stock trades about -0.07 of its potential returns per unit of risk. The Eagon Industrial Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 525,000 in Eagon Industrial Co on November 7, 2024 and sell it today you would earn a total of 19,000 from holding Eagon Industrial Co or generate 3.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Household Healthcare vs. Eagon Industrial Co
Performance |
| Timeline |
| LG Household Healthcare |
| Eagon Industrial |
LG Household and Eagon Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Eagon Industrial
The main advantage of trading using opposite LG Household and Eagon Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Eagon Industrial 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 Eagon Industrial will offset losses from the drop in Eagon Industrial's long position.| LG Household vs. Hyundai Motor | LG Household vs. Solution Advanced Technology | LG Household vs. Busan Industrial Co | LG Household vs. Busan Ind |
| Eagon Industrial vs. AptaBio Therapeutics | Eagon Industrial vs. Daewoo SBI SPAC | Eagon Industrial vs. Dream Security co | Eagon Industrial vs. Microfriend |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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