Correlation Between LG Household and Cube Entertainment
Can any of the company-specific risk be diversified away by investing in both LG Household and Cube 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 Cube 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 Cube Entertainment, you can compare the effects of market volatilities on LG Household and Cube 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 Cube Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Cube Entertainment.
Diversification Opportunities for LG Household and Cube Entertainment
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 051900 and Cube is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Cube Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cube 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 Cube Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cube Entertainment has no effect on the direction of LG Household i.e., LG Household and Cube Entertainment go up and down completely randomly.
Pair Corralation between LG Household and Cube Entertainment
Assuming the 90 days trading horizon LG Household is expected to generate 2.5 times less return on investment than Cube Entertainment. But when comparing it to its historical volatility, LG Household Healthcare is 1.44 times less risky than Cube Entertainment. It trades about 0.17 of its potential returns per unit of risk. Cube Entertainment is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,406,000 in Cube Entertainment on December 6, 2024 and sell it today you would earn a total of 271,000 from holding Cube Entertainment or generate 19.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
LG Household Healthcare vs. Cube Entertainment
Performance |
| Timeline |
| LG Household Healthcare |
| Cube Entertainment |
LG Household and Cube Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Cube Entertainment
The main advantage of trading using opposite LG Household and Cube Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Cube 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 Cube Entertainment will offset losses from the drop in Cube Entertainment's long position.| LG Household vs. Busan Industrial Co | LG Household vs. Asiana Airlines | LG Household vs. Korea Industrial Co | LG Household vs. LG Display Co |
| Cube Entertainment vs. System and Application | Cube Entertainment vs. Formetal Co | Cube Entertainment vs. Eagon Industrial Co | Cube Entertainment vs. Hyundai Industrial 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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