Correlation Between LG Chemicals and Chinyang Hold
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and Chinyang Hold 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 Chinyang Hold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and Chinyang Hold, you can compare the effects of market volatilities on LG Chemicals and Chinyang Hold 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 Chinyang Hold. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and Chinyang Hold.
Diversification Opportunities for LG Chemicals and Chinyang Hold
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 051910 and Chinyang is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and Chinyang Hold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chinyang Hold 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 Chinyang Hold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chinyang Hold has no effect on the direction of LG Chemicals i.e., LG Chemicals and Chinyang Hold go up and down completely randomly.
Pair Corralation between LG Chemicals and Chinyang Hold
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the Chinyang Hold. In addition to that, LG Chemicals is 4.16 times more volatile than Chinyang Hold. It trades about -0.08 of its total potential returns per unit of risk. Chinyang Hold is currently generating about 0.01 per unit of volatility. If you would invest 308,832 in Chinyang Hold on September 3, 2024 and sell it today you would earn a total of 3,668 from holding Chinyang Hold or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Chemicals vs. Chinyang Hold
Performance |
| Timeline |
| LG Chemicals |
| Chinyang Hold |
LG Chemicals and Chinyang Hold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and Chinyang Hold
The main advantage of trading using opposite LG Chemicals and Chinyang Hold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, Chinyang Hold 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 Chinyang Hold will offset losses from the drop in Chinyang Hold's long position.| LG Chemicals vs. Eagle Veterinary Technology | LG Chemicals vs. Daehan Synthetic Fiber | LG Chemicals vs. Chin Yang Chemical | LG Chemicals vs. Global Standard Technology |
| Chinyang Hold vs. Eagon Industrial Co | Chinyang Hold vs. Myoung Shin Industrial | Chinyang Hold vs. UJU Electronics Co | Chinyang Hold vs. MetaLabs Co |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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