Correlation Between LegoChem Biosciences and Jeong Moon
Can any of the company-specific risk be diversified away by investing in both LegoChem Biosciences and Jeong Moon 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 LegoChem Biosciences and Jeong Moon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LegoChem Biosciences and Jeong Moon Information, you can compare the effects of market volatilities on LegoChem Biosciences and Jeong Moon 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 LegoChem Biosciences with a short position of Jeong Moon. Check out your portfolio center. Please also check ongoing floating volatility patterns of LegoChem Biosciences and Jeong Moon.
Diversification Opportunities for LegoChem Biosciences and Jeong Moon
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LegoChem and Jeong is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding LegoChem Biosciences and Jeong Moon Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeong Moon Information and LegoChem Biosciences 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 LegoChem Biosciences are associated (or correlated) with Jeong Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeong Moon Information has no effect on the direction of LegoChem Biosciences i.e., LegoChem Biosciences and Jeong Moon go up and down completely randomly.
Pair Corralation between LegoChem Biosciences and Jeong Moon
Assuming the 90 days trading horizon LegoChem Biosciences is expected to generate 2.04 times more return on investment than Jeong Moon. However, LegoChem Biosciences is 2.04 times more volatile than Jeong Moon Information. It trades about 0.1 of its potential returns per unit of risk. Jeong Moon Information is currently generating about -0.04 per unit of risk. If you would invest 4,465,000 in LegoChem Biosciences on September 14, 2024 and sell it today you would earn a total of 6,435,000 from holding LegoChem Biosciences or generate 144.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LegoChem Biosciences vs. Jeong Moon Information
Performance |
| Timeline |
| LegoChem Biosciences |
| Jeong Moon Information |
LegoChem Biosciences and Jeong Moon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LegoChem Biosciences and Jeong Moon
The main advantage of trading using opposite LegoChem Biosciences and Jeong Moon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LegoChem Biosciences position performs unexpectedly, Jeong Moon 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 Jeong Moon will offset losses from the drop in Jeong Moon's long position.| LegoChem Biosciences vs. Jeong Moon Information | LegoChem Biosciences vs. Ssangyong Information Communication | LegoChem Biosciences vs. Sungchang Autotech Co | LegoChem Biosciences vs. Moadata Co |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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