Correlation Between LG Household and Jeong Moon
Can any of the company-specific risk be diversified away by investing in both LG Household and Jeong Moon 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 Jeong Moon 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 Jeong Moon Information, you can compare the effects of market volatilities on LG Household and Jeong Moon 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 Jeong Moon. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Jeong Moon.
Diversification Opportunities for LG Household and Jeong Moon
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 051900 and Jeong is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Jeong Moon Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeong Moon Information 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 Jeong Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeong Moon Information has no effect on the direction of LG Household i.e., LG Household and Jeong Moon go up and down completely randomly.
Pair Corralation between LG Household and Jeong Moon
Assuming the 90 days trading horizon LG Household Healthcare is expected to under-perform the Jeong Moon. In addition to that, LG Household is 1.28 times more volatile than Jeong Moon Information. It trades about -0.06 of its total potential returns per unit of risk. Jeong Moon Information is currently generating about -0.03 per unit of volatility. If you would invest 121,000 in Jeong Moon Information on November 5, 2024 and sell it today you would lose (37,800) from holding Jeong Moon Information or give up 31.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Household Healthcare vs. Jeong Moon Information
Performance |
| Timeline |
| LG Household Healthcare |
| Jeong Moon Information |
LG Household and Jeong Moon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Jeong Moon
The main advantage of trading using opposite LG Household and Jeong Moon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Jeong Moon 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 Jeong Moon will offset losses from the drop in Jeong Moon's long position.| LG Household vs. Digital Multimedia Technology | LG Household vs. Barunson Entertainment Arts | LG Household vs. LG Display Co | LG Household vs. Grand Korea Leisure |
| Jeong Moon vs. INFINITT Healthcare Co | Jeong Moon vs. Homecast CoLtd | Jeong Moon vs. Aprogen Healthcare Games | Jeong Moon vs. Handok Clean Tech |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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