Correlation Between Netmarble Games and LG Household
Can any of the company-specific risk be diversified away by investing in both Netmarble Games and LG Household 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 Netmarble Games and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netmarble Games Corp and LG Household Healthcare, you can compare the effects of market volatilities on Netmarble Games and LG Household 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 Netmarble Games with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netmarble Games and LG Household.
Diversification Opportunities for Netmarble Games and LG Household
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Netmarble and 051900 is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Netmarble Games Corp and LG Household Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Household Healthcare and Netmarble Games 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 Netmarble Games Corp are associated (or correlated) with LG Household. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Household Healthcare has no effect on the direction of Netmarble Games i.e., Netmarble Games and LG Household go up and down completely randomly.
Pair Corralation between Netmarble Games and LG Household
Assuming the 90 days trading horizon Netmarble Games Corp is expected to generate 1.22 times more return on investment than LG Household. However, Netmarble Games is 1.22 times more volatile than LG Household Healthcare. It trades about 0.02 of its potential returns per unit of risk. LG Household Healthcare is currently generating about -0.05 per unit of risk. If you would invest 5,048,215 in Netmarble Games Corp on September 1, 2024 and sell it today you would earn a total of 251,785 from holding Netmarble Games Corp or generate 4.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Netmarble Games Corp vs. LG Household Healthcare
Performance |
| Timeline |
| Netmarble Games Corp |
| LG Household Healthcare |
Netmarble Games and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netmarble Games and LG Household
The main advantage of trading using opposite Netmarble Games and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netmarble Games position performs unexpectedly, LG Household 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 Household will offset losses from the drop in LG Household's long position.| Netmarble Games vs. AfreecaTV Co | Netmarble Games vs. Seegene | Netmarble Games vs. SS TECH | Netmarble Games vs. Busan Industrial Co |
| LG Household vs. Sungmoon Electronics Co | LG Household vs. Shinil Electronics Co | LG Household vs. LG Electronics | LG Household vs. Cuckoo Homesys Co |
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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