Correlation Between LG Household and Sambo Corrugated
Can any of the company-specific risk be diversified away by investing in both LG Household and Sambo Corrugated 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 Sambo Corrugated 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 Sambo Corrugated Board, you can compare the effects of market volatilities on LG Household and Sambo Corrugated 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 Sambo Corrugated. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Sambo Corrugated.
Diversification Opportunities for LG Household and Sambo Corrugated
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 051905 and Sambo is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Sambo Corrugated Board in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sambo Corrugated Board 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 Sambo Corrugated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sambo Corrugated Board has no effect on the direction of LG Household i.e., LG Household and Sambo Corrugated go up and down completely randomly.
Pair Corralation between LG Household and Sambo Corrugated
Assuming the 90 days trading horizon LG Household Healthcare is expected to under-perform the Sambo Corrugated. In addition to that, LG Household is 2.19 times more volatile than Sambo Corrugated Board. It trades about -0.24 of its total potential returns per unit of risk. Sambo Corrugated Board is currently generating about -0.12 per unit of volatility. If you would invest 816,000 in Sambo Corrugated Board on November 4, 2024 and sell it today you would lose (9,000) from holding Sambo Corrugated Board or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Household Healthcare vs. Sambo Corrugated Board
Performance |
| Timeline |
| LG Household Healthcare |
| Sambo Corrugated Board |
LG Household and Sambo Corrugated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Sambo Corrugated
The main advantage of trading using opposite LG Household and Sambo Corrugated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Sambo Corrugated 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 Sambo Corrugated will offset losses from the drop in Sambo Corrugated's long position.| LG Household vs. Insun Environment New | LG Household vs. Ssangyong Information Communication | LG Household vs. Innowireless Co | LG Household vs. Daechang Steel Co |
| Sambo Corrugated vs. LAKE MATERIALS LTD | Sambo Corrugated vs. Ssangyong Materials Corp | Sambo Corrugated vs. Daejoo Electronic Materials | Sambo Corrugated vs. Formetal 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |