Correlation Between LG Chemicals and Dongbang Ship
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and Dongbang Ship 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 Dongbang Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and Dongbang Ship Machinery, you can compare the effects of market volatilities on LG Chemicals and Dongbang Ship 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 Dongbang Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and Dongbang Ship.
Diversification Opportunities for LG Chemicals and Dongbang Ship
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 051910 and Dongbang is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and Dongbang Ship Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbang Ship Machinery 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 Dongbang Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbang Ship Machinery has no effect on the direction of LG Chemicals i.e., LG Chemicals and Dongbang Ship go up and down completely randomly.
Pair Corralation between LG Chemicals and Dongbang Ship
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the Dongbang Ship. In addition to that, LG Chemicals is 1.03 times more volatile than Dongbang Ship Machinery. It trades about -0.32 of its total potential returns per unit of risk. Dongbang Ship Machinery is currently generating about 0.07 per unit of volatility. If you would invest 311,000 in Dongbang Ship Machinery on November 5, 2024 and sell it today you would earn a total of 7,500 from holding Dongbang Ship Machinery or generate 2.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Chemicals vs. Dongbang Ship Machinery
Performance |
| Timeline |
| LG Chemicals |
| Dongbang Ship Machinery |
LG Chemicals and Dongbang Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and Dongbang Ship
The main advantage of trading using opposite LG Chemicals and Dongbang Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, Dongbang Ship 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 Dongbang Ship will offset losses from the drop in Dongbang Ship's long position.| LG Chemicals vs. Lotte Non Life Insurance | LG Chemicals vs. Haitai Confectionery Foods | LG Chemicals vs. Innowireless Co | LG Chemicals vs. Lotte Chilsung Beverage |
| Dongbang Ship vs. Lotte Data Communication | Dongbang Ship vs. Pan Entertainment Co | Dongbang Ship vs. Daishin Information Communications | Dongbang Ship vs. JYP Entertainment Corp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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