Correlation Between LG Chemicals and CS BEARING
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and CS BEARING 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 CS BEARING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and CS BEARING CoLtd, you can compare the effects of market volatilities on LG Chemicals and CS BEARING 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 CS BEARING. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and CS BEARING.
Diversification Opportunities for LG Chemicals and CS BEARING
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 051910 and 297090 is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and CS BEARING CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CS BEARING CoLtd 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 CS BEARING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CS BEARING CoLtd has no effect on the direction of LG Chemicals i.e., LG Chemicals and CS BEARING go up and down completely randomly.
Pair Corralation between LG Chemicals and CS BEARING
Assuming the 90 days trading horizon LG Chemicals is expected to generate 0.84 times more return on investment than CS BEARING. However, LG Chemicals is 1.19 times less risky than CS BEARING. It trades about -0.14 of its potential returns per unit of risk. CS BEARING CoLtd is currently generating about -0.38 per unit of risk. If you would invest 32,800,000 in LG Chemicals on August 25, 2024 and sell it today you would lose (3,000,000) from holding LG Chemicals or give up 9.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
LG Chemicals vs. CS BEARING CoLtd
Performance |
| Timeline |
| LG Chemicals |
| CS BEARING CoLtd |
LG Chemicals and CS BEARING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and CS BEARING
The main advantage of trading using opposite LG Chemicals and CS BEARING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, CS BEARING 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 CS BEARING will offset losses from the drop in CS BEARING's long position.| LG Chemicals vs. POSCO Holdings | LG Chemicals vs. Lotte Chemical Corp | LG Chemicals vs. Hyundai Steel | LG Chemicals vs. Dongkuk Steel Mill |
| CS BEARING vs. LG Chemicals | CS BEARING vs. Ni Steel | CS BEARING vs. DONGKUK STEEL MILL | CS BEARING vs. Hanjin Transportation 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |