Correlation Between Daesung Hi-Tech and LB Investment
Can any of the company-specific risk be diversified away by investing in both Daesung Hi-Tech and LB Investment 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 Daesung Hi-Tech and LB Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daesung Hi Tech Co and LB Investment, you can compare the effects of market volatilities on Daesung Hi-Tech and LB Investment 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 Daesung Hi-Tech with a short position of LB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daesung Hi-Tech and LB Investment.
Diversification Opportunities for Daesung Hi-Tech and LB Investment
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Daesung and 309960 is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Hi Tech Co and LB Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Investment and Daesung Hi-Tech 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 Daesung Hi Tech Co are associated (or correlated) with LB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Investment has no effect on the direction of Daesung Hi-Tech i.e., Daesung Hi-Tech and LB Investment go up and down completely randomly.
Pair Corralation between Daesung Hi-Tech and LB Investment
Assuming the 90 days trading horizon Daesung Hi Tech Co is expected to under-perform the LB Investment. But the stock apears to be less risky and, when comparing its historical volatility, Daesung Hi Tech Co is 1.21 times less risky than LB Investment. The stock trades about -0.06 of its potential returns per unit of risk. The LB Investment is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 429,589 in LB Investment on September 14, 2024 and sell it today you would lose (109,089) from holding LB Investment or give up 25.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daesung Hi Tech Co vs. LB Investment
Performance |
| Timeline |
| Daesung Hi Tech |
| LB Investment |
Daesung Hi-Tech and LB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daesung Hi-Tech and LB Investment
The main advantage of trading using opposite Daesung Hi-Tech and LB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daesung Hi-Tech position performs unexpectedly, LB Investment 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 LB Investment will offset losses from the drop in LB Investment's long position.| Daesung Hi-Tech vs. Dongwoo Farm To | Daesung Hi-Tech vs. Keyang Electric Machinery | Daesung Hi-Tech vs. Shinsegae Engineering Construction | Daesung Hi-Tech vs. BIT Computer Co |
| LB Investment vs. Samsung Electronics Co | LB Investment vs. Samsung Electronics Co | LB Investment vs. LG Energy Solution | LB Investment vs. SK Hynix |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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