Correlation Between Eugene Technology and LG Household
Can any of the company-specific risk be diversified away by investing in both Eugene Technology 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 Eugene Technology and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eugene Technology CoLtd and LG Household Healthcare, you can compare the effects of market volatilities on Eugene Technology 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 Eugene Technology with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eugene Technology and LG Household.
Diversification Opportunities for Eugene Technology and LG Household
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eugene and 051905 is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Eugene Technology CoLtd 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 Eugene Technology 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 Eugene Technology CoLtd 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 Eugene Technology i.e., Eugene Technology and LG Household go up and down completely randomly.
Pair Corralation between Eugene Technology and LG Household
Assuming the 90 days trading horizon Eugene Technology CoLtd is expected to generate 1.33 times more return on investment than LG Household. However, Eugene Technology is 1.33 times more volatile than LG Household Healthcare. It trades about 0.03 of its potential returns per unit of risk. LG Household Healthcare is currently generating about -0.04 per unit of risk. If you would invest 3,505,000 in Eugene Technology CoLtd on August 26, 2024 and sell it today you would earn a total of 30,000 from holding Eugene Technology CoLtd or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eugene Technology CoLtd vs. LG Household Healthcare
Performance |
| Timeline |
| Eugene Technology CoLtd |
| LG Household Healthcare |
Eugene Technology and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eugene Technology and LG Household
The main advantage of trading using opposite Eugene Technology and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eugene Technology 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.| Eugene Technology vs. LG Household Healthcare | Eugene Technology vs. Hanjoo Light Metal | Eugene Technology vs. DONGKUK TED METAL | Eugene Technology vs. Insung Information Co |
| LG Household vs. Nice Information Telecommunication | LG Household vs. Iljin Display | LG Household vs. DB Insurance Co | LG Household vs. ZUM Internet Corp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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