Correlation Between LG Household and Barunson Entertainment
Can any of the company-specific risk be diversified away by investing in both LG Household and Barunson Entertainment 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 Barunson Entertainment 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 Barunson Entertainment Arts, you can compare the effects of market volatilities on LG Household and Barunson Entertainment 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 Barunson Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Barunson Entertainment.
Diversification Opportunities for LG Household and Barunson Entertainment
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 051900 and Barunson is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Barunson Entertainment Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barunson Entertainment 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 Barunson Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barunson Entertainment has no effect on the direction of LG Household i.e., LG Household and Barunson Entertainment go up and down completely randomly.
Pair Corralation between LG Household and Barunson Entertainment
Assuming the 90 days trading horizon LG Household Healthcare is expected to under-perform the Barunson Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, LG Household Healthcare is 2.3 times less risky than Barunson Entertainment. The stock trades about -0.15 of its potential returns per unit of risk. The Barunson Entertainment Arts is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 44,600 in Barunson Entertainment Arts on October 26, 2024 and sell it today you would lose (1,100) from holding Barunson Entertainment Arts or give up 2.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Household Healthcare vs. Barunson Entertainment Arts
Performance |
| Timeline |
| LG Household Healthcare |
| Barunson Entertainment |
LG Household and Barunson Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Barunson Entertainment
The main advantage of trading using opposite LG Household and Barunson Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Barunson Entertainment 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 Barunson Entertainment will offset losses from the drop in Barunson Entertainment's long position.| LG Household vs. Nice Information Telecommunication | LG Household vs. Haitai Confectionery Foods | LG Household vs. Moadata Co | LG Household vs. DataSolution |
| Barunson Entertainment vs. Busan Industrial Co | Barunson Entertainment vs. Busan Ind | Barunson Entertainment vs. RPBio Inc | Barunson Entertainment vs. Finebesteel |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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