Correlation Between LF Co and Ecopro BM
Can any of the company-specific risk be diversified away by investing in both LF Co and Ecopro BM 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 LF Co and Ecopro BM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LF Co and Ecopro BM Co, you can compare the effects of market volatilities on LF Co and Ecopro BM 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 LF Co with a short position of Ecopro BM. Check out your portfolio center. Please also check ongoing floating volatility patterns of LF Co and Ecopro BM.
Diversification Opportunities for LF Co and Ecopro BM
Very weak diversification
The 3 months correlation between 066970 and Ecopro is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding LF Co and Ecopro BM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopro BM and LF Co 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 LF Co are associated (or correlated) with Ecopro BM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecopro BM has no effect on the direction of LF Co i.e., LF Co and Ecopro BM go up and down completely randomly.
Pair Corralation between LF Co and Ecopro BM
Assuming the 90 days trading horizon LF Co is expected to generate 1.14 times more return on investment than Ecopro BM. However, LF Co is 1.14 times more volatile than Ecopro BM Co. It trades about -0.12 of its potential returns per unit of risk. Ecopro BM Co is currently generating about -0.17 per unit of risk. If you would invest 11,820,000 in LF Co on September 13, 2024 and sell it today you would lose (1,500,000) from holding LF Co or give up 12.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LF Co vs. Ecopro BM Co
Performance |
| Timeline |
| LF Co |
| Ecopro BM |
LF Co and Ecopro BM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LF Co and Ecopro BM
The main advantage of trading using opposite LF Co and Ecopro BM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LF Co position performs unexpectedly, Ecopro BM 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 Ecopro BM will offset losses from the drop in Ecopro BM's long position.| LF Co vs. Cube Entertainment | LF Co vs. Dreamus Company | LF Co vs. LG Energy Solution | LF Co vs. Dongwon System |
| Ecopro BM vs. Sangsin Energy Display | Ecopro BM vs. Solution Advanced Technology | Ecopro BM vs. Busan Industrial Co | Ecopro BM vs. Busan Ind |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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