Correlation Between LG Household and Osteonic
Can any of the company-specific risk be diversified away by investing in both LG Household and Osteonic 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 Osteonic 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 Osteonic Co, you can compare the effects of market volatilities on LG Household and Osteonic 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 Osteonic. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Osteonic.
Diversification Opportunities for LG Household and Osteonic
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 051905 and Osteonic is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Osteonic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osteonic 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 Osteonic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osteonic has no effect on the direction of LG Household i.e., LG Household and Osteonic go up and down completely randomly.
Pair Corralation between LG Household and Osteonic
Assuming the 90 days trading horizon LG Household is expected to generate 141.13 times less return on investment than Osteonic. But when comparing it to its historical volatility, LG Household Healthcare is 1.92 times less risky than Osteonic. It trades about 0.0 of its potential returns per unit of risk. Osteonic Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 568,000 in Osteonic Co on September 13, 2024 and sell it today you would earn a total of 8,000 from holding Osteonic Co or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
LG Household Healthcare vs. Osteonic Co
Performance |
| Timeline |
| LG Household Healthcare |
| Osteonic |
LG Household and Osteonic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Osteonic
The main advantage of trading using opposite LG Household and Osteonic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Osteonic 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 Osteonic will offset losses from the drop in Osteonic'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 |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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