Correlation Between KPX Green and LG Household
Can any of the company-specific risk be diversified away by investing in both KPX Green and LG Household 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 KPX Green and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KPX Green Chemical and LG Household Healthcare, you can compare the effects of market volatilities on KPX Green and LG Household 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 KPX Green with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of KPX Green and LG Household.
Diversification Opportunities for KPX Green and LG Household
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between KPX and 051900 is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding KPX Green Chemical and LG Household Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Household Healthcare and KPX Green 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 KPX Green Chemical are associated (or correlated) with LG Household. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Household Healthcare has no effect on the direction of KPX Green i.e., KPX Green and LG Household go up and down completely randomly.
Pair Corralation between KPX Green and LG Household
Assuming the 90 days trading horizon KPX Green Chemical is expected to under-perform the LG Household. In addition to that, KPX Green is 3.66 times more volatile than LG Household Healthcare. It trades about -0.08 of its total potential returns per unit of risk. LG Household Healthcare is currently generating about -0.07 per unit of volatility. If you would invest 31,200,000 in LG Household Healthcare on November 4, 2024 and sell it today you would lose (500,000) from holding LG Household Healthcare or give up 1.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KPX Green Chemical vs. LG Household Healthcare
Performance |
| Timeline |
| KPX Green Chemical |
| LG Household Healthcare |
KPX Green and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KPX Green and LG Household
The main advantage of trading using opposite KPX Green and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KPX Green position performs unexpectedly, LG Household 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 Household will offset losses from the drop in LG Household's long position.| KPX Green vs. Asiana Airlines | KPX Green vs. Woori Technology Investment | KPX Green vs. Atinum Investment Co | KPX Green vs. Seoul Semiconductor Co |
| LG Household vs. Samyang Foods Co | LG Household vs. KTB Investment Securities | LG Household vs. FOODWELL Co | LG Household vs. Haitai Confectionery Foods |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |