Correlation Between LG Chemicals and Eagon Industrial
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and Eagon Industrial 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 Chemicals and Eagon Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and Eagon Industrial Co, you can compare the effects of market volatilities on LG Chemicals and Eagon Industrial 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 Chemicals with a short position of Eagon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and Eagon Industrial.
Diversification Opportunities for LG Chemicals and Eagon Industrial
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 051910 and Eagon is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and Eagon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagon Industrial and LG Chemicals 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 Chemicals are associated (or correlated) with Eagon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagon Industrial has no effect on the direction of LG Chemicals i.e., LG Chemicals and Eagon Industrial go up and down completely randomly.
Pair Corralation between LG Chemicals and Eagon Industrial
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the Eagon Industrial. But the stock apears to be less risky and, when comparing its historical volatility, LG Chemicals is 1.09 times less risky than Eagon Industrial. The stock trades about -0.11 of its potential returns per unit of risk. The Eagon Industrial Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 622,788 in Eagon Industrial Co on November 8, 2024 and sell it today you would lose (67,788) from holding Eagon Industrial Co or give up 10.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Chemicals vs. Eagon Industrial Co
Performance |
| Timeline |
| LG Chemicals |
| Eagon Industrial |
LG Chemicals and Eagon Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and Eagon Industrial
The main advantage of trading using opposite LG Chemicals and Eagon Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, Eagon Industrial 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 Eagon Industrial will offset losses from the drop in Eagon Industrial's long position.| LG Chemicals vs. CU Medical Systems | LG Chemicals vs. Vitzro Tech Co | LG Chemicals vs. LG Household Healthcare | LG Chemicals vs. Sewoon Medical Co |
| Eagon Industrial vs. Seers Technology | Eagon Industrial vs. Songwon Industrial Co | Eagon Industrial vs. ENF Technology Co | Eagon Industrial vs. Bosung Power Technology |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |