Correlation Between LG Chemicals and Organic Special
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and Organic Special 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 Organic Special into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and Organic Special Pet, you can compare the effects of market volatilities on LG Chemicals and Organic Special 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 Organic Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and Organic Special.
Diversification Opportunities for LG Chemicals and Organic Special
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between 051910 and Organic is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and Organic Special Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organic Special Pet 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 Organic Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organic Special Pet has no effect on the direction of LG Chemicals i.e., LG Chemicals and Organic Special go up and down completely randomly.
Pair Corralation between LG Chemicals and Organic Special
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the Organic Special. In addition to that, LG Chemicals is 3.48 times more volatile than Organic Special Pet. It trades about -0.39 of its total potential returns per unit of risk. Organic Special Pet is currently generating about -0.19 per unit of volatility. If you would invest 271,000 in Organic Special Pet on November 7, 2024 and sell it today you would lose (7,000) from holding Organic Special Pet or give up 2.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Chemicals vs. Organic Special Pet
Performance |
| Timeline |
| LG Chemicals |
| Organic Special Pet |
LG Chemicals and Organic Special Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and Organic Special
The main advantage of trading using opposite LG Chemicals and Organic Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, Organic Special 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 Organic Special will offset losses from the drop in Organic Special's long position.| LG Chemicals vs. Daou Data Corp | LG Chemicals vs. NH Investment Securities | LG Chemicals vs. Nh Investment And | LG Chemicals vs. Miwon Chemicals Co |
| Organic Special vs. Daelim Trading Co | Organic Special vs. TS Investment Corp | Organic Special vs. SBI Investment KOREA | Organic Special 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |