Correlation Between LG Household and Kbi Metal
Can any of the company-specific risk be diversified away by investing in both LG Household and Kbi Metal 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 Kbi Metal 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 Kbi Metal Co, you can compare the effects of market volatilities on LG Household and Kbi Metal 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 Kbi Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Kbi Metal.
Diversification Opportunities for LG Household and Kbi Metal
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 051905 and Kbi is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Kbi Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kbi Metal 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 Kbi Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kbi Metal has no effect on the direction of LG Household i.e., LG Household and Kbi Metal go up and down completely randomly.
Pair Corralation between LG Household and Kbi Metal
Assuming the 90 days trading horizon LG Household Healthcare is expected to generate 0.55 times more return on investment than Kbi Metal. However, LG Household Healthcare is 1.82 times less risky than Kbi Metal. It trades about -0.07 of its potential returns per unit of risk. Kbi Metal Co is currently generating about -0.31 per unit of risk. If you would invest 15,020,000 in LG Household Healthcare on August 29, 2024 and sell it today you would lose (460,000) from holding LG Household Healthcare or give up 3.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Household Healthcare vs. Kbi Metal Co
Performance |
| Timeline |
| LG Household Healthcare |
| Kbi Metal |
LG Household and Kbi Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Kbi Metal
The main advantage of trading using opposite LG Household and Kbi Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Kbi Metal 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 Kbi Metal will offset losses from the drop in Kbi Metal's long position.| LG Household vs. LG Household Healthcare | LG Household vs. Amorepacific Corp | LG Household vs. CKH Food Health |
| Kbi Metal vs. Daesung Private Equity | Kbi Metal vs. Busan Industrial Co | Kbi Metal vs. Busan Ind | Kbi Metal vs. Shinhan WTI Futures |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |