Correlation Between CU Medical and LG Chemicals
Can any of the company-specific risk be diversified away by investing in both CU Medical and LG Chemicals 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 CU Medical and LG Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CU Medical Systems and LG Chemicals, you can compare the effects of market volatilities on CU Medical and LG Chemicals 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 CU Medical with a short position of LG Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of CU Medical and LG Chemicals.
Diversification Opportunities for CU Medical and LG Chemicals
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 115480 and 051910 is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CU Medical Systems and LG Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chemicals and CU Medical 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 CU Medical Systems are associated (or correlated) with LG Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chemicals has no effect on the direction of CU Medical i.e., CU Medical and LG Chemicals go up and down completely randomly.
Pair Corralation between CU Medical and LG Chemicals
Assuming the 90 days trading horizon CU Medical Systems is expected to generate 0.46 times more return on investment than LG Chemicals. However, CU Medical Systems is 2.16 times less risky than LG Chemicals. It trades about 0.06 of its potential returns per unit of risk. LG Chemicals is currently generating about -0.06 per unit of risk. If you would invest 68,500 in CU Medical Systems on October 26, 2024 and sell it today you would earn a total of 800.00 from holding CU Medical Systems or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CU Medical Systems vs. LG Chemicals
Performance |
| Timeline |
| CU Medical Systems |
| LG Chemicals |
CU Medical and LG Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CU Medical and LG Chemicals
The main advantage of trading using opposite CU Medical and LG Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CU Medical position performs unexpectedly, LG Chemicals 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 Chemicals will offset losses from the drop in LG Chemicals' long position.| CU Medical vs. Medy Tox | CU Medical vs. InBody CoLtd | CU Medical vs. Soulbrain Holdings Co | CU Medical vs. Busan Industrial Co |
| LG Chemicals vs. DataSolution | LG Chemicals vs. Ewon Comfortech Co | LG Chemicals vs. N2Tech Co | LG Chemicals vs. CU Medical Systems |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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