Correlation Between LG Household and Mobileleader CoLtd
Can any of the company-specific risk be diversified away by investing in both LG Household and Mobileleader CoLtd 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 Mobileleader CoLtd 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 Mobileleader CoLtd, you can compare the effects of market volatilities on LG Household and Mobileleader CoLtd 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 Mobileleader CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Mobileleader CoLtd.
Diversification Opportunities for LG Household and Mobileleader CoLtd
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 051905 and Mobileleader is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Mobileleader CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobileleader CoLtd 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 Mobileleader CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobileleader CoLtd has no effect on the direction of LG Household i.e., LG Household and Mobileleader CoLtd go up and down completely randomly.
Pair Corralation between LG Household and Mobileleader CoLtd
Assuming the 90 days trading horizon LG Household is expected to generate 7.99 times less return on investment than Mobileleader CoLtd. But when comparing it to its historical volatility, LG Household Healthcare is 1.49 times less risky than Mobileleader CoLtd. It trades about 0.05 of its potential returns per unit of risk. Mobileleader CoLtd is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,499,000 in Mobileleader CoLtd on September 14, 2024 and sell it today you would earn a total of 211,000 from holding Mobileleader CoLtd or generate 14.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Household Healthcare vs. Mobileleader CoLtd
Performance |
| Timeline |
| LG Household Healthcare |
| Mobileleader CoLtd |
LG Household and Mobileleader CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Mobileleader CoLtd
The main advantage of trading using opposite LG Household and Mobileleader CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Mobileleader CoLtd 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 Mobileleader CoLtd will offset losses from the drop in Mobileleader CoLtd's long position.| LG Household vs. LG Household Healthcare | LG Household vs. Amorepacific Corp | LG Household vs. Jayjun Co | LG Household vs. CKH Food Health |
| Mobileleader CoLtd vs. Cube Entertainment | Mobileleader CoLtd vs. Dreamus Company | Mobileleader CoLtd vs. LG Energy Solution | Mobileleader CoLtd vs. Dongwon System |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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