Correlation Between LG Chemicals and Xavis
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and Xavis 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 Xavis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and Xavis Co, you can compare the effects of market volatilities on LG Chemicals and Xavis 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 Xavis. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and Xavis.
Diversification Opportunities for LG Chemicals and Xavis
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 051910 and Xavis is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and Xavis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xavis 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 Xavis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xavis has no effect on the direction of LG Chemicals i.e., LG Chemicals and Xavis go up and down completely randomly.
Pair Corralation between LG Chemicals and Xavis
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the Xavis. In addition to that, LG Chemicals is 1.39 times more volatile than Xavis Co. It trades about -0.13 of its total potential returns per unit of risk. Xavis Co is currently generating about 0.11 per unit of volatility. If you would invest 129,100 in Xavis Co on October 24, 2024 and sell it today you would earn a total of 4,300 from holding Xavis Co or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Chemicals vs. Xavis Co
Performance |
| Timeline |
| LG Chemicals |
| Xavis |
LG Chemicals and Xavis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and Xavis
The main advantage of trading using opposite LG Chemicals and Xavis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, Xavis 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 Xavis will offset losses from the drop in Xavis' long position.| LG Chemicals vs. KT Submarine Telecom | LG Chemicals vs. GS Retail Co | LG Chemicals vs. Pan Entertainment Co | LG Chemicals vs. MEDIANA CoLtd |
| Xavis vs. KakaoBank Corp | Xavis vs. Dgb Financial | Xavis vs. Koryo Credit Information | Xavis vs. Korean Drug 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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