Correlation Between LG Chemicals and Aptamer Sciences
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and Aptamer Sciences 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 Aptamer Sciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and Aptamer Sciences, you can compare the effects of market volatilities on LG Chemicals and Aptamer Sciences 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 Aptamer Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and Aptamer Sciences.
Diversification Opportunities for LG Chemicals and Aptamer Sciences
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between 051910 and Aptamer is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and Aptamer Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptamer Sciences 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 Aptamer Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptamer Sciences has no effect on the direction of LG Chemicals i.e., LG Chemicals and Aptamer Sciences go up and down completely randomly.
Pair Corralation between LG Chemicals and Aptamer Sciences
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the Aptamer Sciences. But the stock apears to be less risky and, when comparing its historical volatility, LG Chemicals is 2.15 times less risky than Aptamer Sciences. The stock trades about -0.08 of its potential returns per unit of risk. The Aptamer Sciences is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 397,509 in Aptamer Sciences on November 19, 2024 and sell it today you would lose (303,309) from holding Aptamer Sciences or give up 76.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
LG Chemicals vs. Aptamer Sciences
Performance |
| Timeline |
| LG Chemicals |
| Aptamer Sciences |
LG Chemicals and Aptamer Sciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and Aptamer Sciences
The main advantage of trading using opposite LG Chemicals and Aptamer Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, Aptamer Sciences 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 Aptamer Sciences will offset losses from the drop in Aptamer Sciences' long position.| LG Chemicals vs. Mobile Appliance | LG Chemicals vs. Nable Communications | LG Chemicals vs. Alton Sports CoLtd | LG Chemicals vs. Dongbang Transport Logistics |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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