Correlation Between LIG ES and Chunbo
Can any of the company-specific risk be diversified away by investing in both LIG ES and Chunbo 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 LIG ES and Chunbo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIG ES SPAC and Chunbo Co, you can compare the effects of market volatilities on LIG ES and Chunbo 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 LIG ES with a short position of Chunbo. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIG ES and Chunbo.
Diversification Opportunities for LIG ES and Chunbo
Almost no diversification
The 3 months correlation between LIG and Chunbo is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding LIG ES SPAC and Chunbo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunbo and LIG ES 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 LIG ES SPAC are associated (or correlated) with Chunbo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chunbo has no effect on the direction of LIG ES i.e., LIG ES and Chunbo go up and down completely randomly.
Pair Corralation between LIG ES and Chunbo
Assuming the 90 days trading horizon LIG ES SPAC is expected to generate 1.02 times more return on investment than Chunbo. However, LIG ES is 1.02 times more volatile than Chunbo Co. It trades about -0.04 of its potential returns per unit of risk. Chunbo Co is currently generating about -0.09 per unit of risk. If you would invest 888,000 in LIG ES SPAC on August 24, 2024 and sell it today you would lose (524,000) from holding LIG ES SPAC or give up 59.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIG ES SPAC vs. Chunbo Co
Performance |
| Timeline |
| LIG ES SPAC |
| Chunbo |
LIG ES and Chunbo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIG ES and Chunbo
The main advantage of trading using opposite LIG ES and Chunbo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIG ES position performs unexpectedly, Chunbo 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 Chunbo will offset losses from the drop in Chunbo's long position.| LIG ES vs. Ni Steel | LIG ES vs. SBI Investment KOREA | LIG ES vs. DB Financial Investment | LIG ES vs. Lindeman Asia Investment |
| Chunbo vs. Dongil Metal Co | Chunbo vs. Shinhan Inverse Copper | Chunbo vs. Dongwon Metal Co | Chunbo vs. Daejung Chemicals Metals |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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