Correlation Between EBEST Investment and LG Uplus
Can any of the company-specific risk be diversified away by investing in both EBEST Investment and LG Uplus 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 EBEST Investment and LG Uplus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EBEST Investment Securities and LG Uplus, you can compare the effects of market volatilities on EBEST Investment and LG Uplus 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 EBEST Investment with a short position of LG Uplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBEST Investment and LG Uplus.
Diversification Opportunities for EBEST Investment and LG Uplus
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EBEST and 032640 is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding EBEST Investment Securities and LG Uplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Uplus and EBEST Investment 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 EBEST Investment Securities are associated (or correlated) with LG Uplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Uplus has no effect on the direction of EBEST Investment i.e., EBEST Investment and LG Uplus go up and down completely randomly.
Pair Corralation between EBEST Investment and LG Uplus
Assuming the 90 days trading horizon EBEST Investment Securities is expected to under-perform the LG Uplus. But the stock apears to be less risky and, when comparing its historical volatility, EBEST Investment Securities is 1.11 times less risky than LG Uplus. The stock trades about -0.28 of its potential returns per unit of risk. The LG Uplus is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 1,006,000 in LG Uplus on September 5, 2024 and sell it today you would earn a total of 146,000 from holding LG Uplus or generate 14.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
EBEST Investment Securities vs. LG Uplus
Performance |
| Timeline |
| EBEST Investment Sec |
| LG Uplus |
EBEST Investment and LG Uplus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EBEST Investment and LG Uplus
The main advantage of trading using opposite EBEST Investment and LG Uplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBEST Investment position performs unexpectedly, LG Uplus 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 LG Uplus will offset losses from the drop in LG Uplus' long position.| EBEST Investment vs. Hansol Homedeco Co | EBEST Investment vs. Cuckoo Homesys Co | EBEST Investment vs. Daishin Information Communications | EBEST Investment vs. Jin Air Co |
| LG Uplus vs. NH Investment Securities | LG Uplus vs. Nh Investment And | LG Uplus vs. SV Investment | LG Uplus vs. DB Financial Investment |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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