Correlation Between LG Household and Netmarble Games
Can any of the company-specific risk be diversified away by investing in both LG Household and Netmarble Games 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 Netmarble Games 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 Netmarble Games Corp, you can compare the effects of market volatilities on LG Household and Netmarble Games 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 Netmarble Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Netmarble Games.
Diversification Opportunities for LG Household and Netmarble Games
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 051900 and Netmarble is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Netmarble Games Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netmarble Games Corp 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 Netmarble Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netmarble Games Corp has no effect on the direction of LG Household i.e., LG Household and Netmarble Games go up and down completely randomly.
Pair Corralation between LG Household and Netmarble Games
Assuming the 90 days trading horizon LG Household Healthcare is expected to generate 0.68 times more return on investment than Netmarble Games. However, LG Household Healthcare is 1.48 times less risky than Netmarble Games. It trades about -0.07 of its potential returns per unit of risk. Netmarble Games Corp is currently generating about -0.54 per unit of risk. If you would invest 31,200,000 in LG Household Healthcare on November 6, 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Household Healthcare vs. Netmarble Games Corp
Performance |
| Timeline |
| LG Household Healthcare |
| Netmarble Games Corp |
LG Household and Netmarble Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Netmarble Games
The main advantage of trading using opposite LG Household and Netmarble Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Netmarble Games 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 Netmarble Games will offset losses from the drop in Netmarble Games' long position.| LG Household vs. Daechang Steel Co | LG Household vs. Hyundai BNG Steel | LG Household vs. Samhyun Steel Co | LG Household vs. Automobile Pc |
| Netmarble Games vs. Digital Power Communications | Netmarble Games vs. Korea Information Communications | Netmarble Games vs. Kisan Telecom Co | Netmarble Games vs. YeaRimDang Publishing 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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