Correlation Between Green Cross and LS Materials
Can any of the company-specific risk be diversified away by investing in both Green Cross and LS Materials 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 Green Cross and LS Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Cross Medical and LS Materials, you can compare the effects of market volatilities on Green Cross and LS Materials 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 Green Cross with a short position of LS Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Cross and LS Materials.
Diversification Opportunities for Green Cross and LS Materials
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Green and 417200 is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Green Cross Medical and LS Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LS Materials and Green Cross 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 Green Cross Medical are associated (or correlated) with LS Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LS Materials has no effect on the direction of Green Cross i.e., Green Cross and LS Materials go up and down completely randomly.
Pair Corralation between Green Cross and LS Materials
Assuming the 90 days trading horizon Green Cross is expected to generate 14.11 times less return on investment than LS Materials. But when comparing it to its historical volatility, Green Cross Medical is 1.17 times less risky than LS Materials. It trades about 0.0 of its potential returns per unit of risk. LS Materials is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,530,000 in LS Materials on October 24, 2024 and sell it today you would lose (49,000) from holding LS Materials or give up 3.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Green Cross Medical vs. LS Materials
Performance |
| Timeline |
| Green Cross Medical |
| LS Materials |
Green Cross and LS Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Cross and LS Materials
The main advantage of trading using opposite Green Cross and LS Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Cross position performs unexpectedly, LS Materials 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 LS Materials will offset losses from the drop in LS Materials' long position.| Green Cross vs. Automobile Pc | Green Cross vs. Youl Chon Chemical | Green Cross vs. Tae Kyung Chemical | Green Cross vs. Korea Information Communications |
| LS Materials vs. Samsung Electronics Co | LS Materials vs. Samsung Electronics Co | LS Materials vs. LG Energy Solution | LS Materials 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 Stocks Directory module to find actively traded stocks across global markets.
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