Correlation Between LG Household and KPX Green
Can any of the company-specific risk be diversified away by investing in both LG Household and KPX Green 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 KPX Green 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 KPX Green Chemical, you can compare the effects of market volatilities on LG Household and KPX Green 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 KPX Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and KPX Green.
Diversification Opportunities for LG Household and KPX Green
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 051900 and KPX is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and KPX Green Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KPX Green Chemical 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 KPX Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KPX Green Chemical has no effect on the direction of LG Household i.e., LG Household and KPX Green go up and down completely randomly.
Pair Corralation between LG Household and KPX Green
Assuming the 90 days trading horizon LG Household Healthcare is expected to generate 0.27 times more return on investment than KPX Green. However, LG Household Healthcare is 3.66 times less risky than KPX Green. It trades about -0.07 of its potential returns per unit of risk. KPX Green Chemical is currently generating about -0.08 per unit of risk. If you would invest 31,200,000 in LG Household Healthcare on November 4, 2024 and sell it today you would lose (500,000) from holding LG Household Healthcare or give up 1.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Household Healthcare vs. KPX Green Chemical
Performance |
| Timeline |
| LG Household Healthcare |
| KPX Green Chemical |
LG Household and KPX Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and KPX Green
The main advantage of trading using opposite LG Household and KPX Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, KPX Green 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 KPX Green will offset losses from the drop in KPX Green's long position.| LG Household vs. Samyang Foods Co | LG Household vs. KTB Investment Securities | LG Household vs. FOODWELL Co | LG Household vs. Haitai Confectionery Foods |
| KPX Green vs. Asiana Airlines | KPX Green vs. Woori Technology Investment | KPX Green vs. Atinum Investment Co | KPX Green vs. Seoul Semiconductor 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |