Correlation Between LG Household and Next Entertainment
Can any of the company-specific risk be diversified away by investing in both LG Household and Next 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 Next 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 Next Entertainment World, you can compare the effects of market volatilities on LG Household and Next 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 Next Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Next Entertainment.
Diversification Opportunities for LG Household and Next Entertainment
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between 051900 and Next is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Next Entertainment World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Entertainment World 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 Next Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Entertainment World has no effect on the direction of LG Household i.e., LG Household and Next Entertainment go up and down completely randomly.
Pair Corralation between LG Household and Next Entertainment
Assuming the 90 days trading horizon LG Household Healthcare is expected to under-perform the Next Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, LG Household Healthcare is 2.31 times less risky than Next Entertainment. The stock trades about -0.08 of its potential returns per unit of risk. The Next Entertainment World is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 234,500 in Next Entertainment World on October 30, 2024 and sell it today you would lose (8,500) from holding Next Entertainment World or give up 3.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Household Healthcare vs. Next Entertainment World
Performance |
| Timeline |
| LG Household Healthcare |
| Next Entertainment World |
LG Household and Next Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Next Entertainment
The main advantage of trading using opposite LG Household and Next Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Next 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 Next Entertainment will offset losses from the drop in Next Entertainment's long position.| LG Household vs. Busan Industrial Co | LG Household vs. Busan Ind | LG Household vs. RPBio Inc | LG Household vs. Finebesteel |
| Next Entertainment vs. Display Tech Co | Next Entertainment vs. Sangsin Energy Display | Next Entertainment vs. DB Insurance Co | Next Entertainment vs. Pureun Mutual Savings |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| 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 | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |