Correlation Between CG Hi and LIG ES
Can any of the company-specific risk be diversified away by investing in both CG Hi and LIG ES 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 CG Hi and LIG ES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CG Hi Tech and LIG ES SPAC, you can compare the effects of market volatilities on CG Hi and LIG ES 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 CG Hi with a short position of LIG ES. Check out your portfolio center. Please also check ongoing floating volatility patterns of CG Hi and LIG ES.
Diversification Opportunities for CG Hi and LIG ES
Almost no diversification
The 3 months correlation between 264660 and LIG is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding CG Hi Tech and LIG ES SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIG ES SPAC and CG Hi 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 CG Hi Tech are associated (or correlated) with LIG ES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIG ES SPAC has no effect on the direction of CG Hi i.e., CG Hi and LIG ES go up and down completely randomly.
Pair Corralation between CG Hi and LIG ES
Assuming the 90 days trading horizon CG Hi Tech is expected to generate 0.83 times more return on investment than LIG ES. However, CG Hi Tech is 1.2 times less risky than LIG ES. It trades about -0.45 of its potential returns per unit of risk. LIG ES SPAC is currently generating about -0.42 per unit of risk. If you would invest 1,247,000 in CG Hi Tech on September 4, 2024 and sell it today you would lose (303,000) from holding CG Hi Tech or give up 24.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CG Hi Tech vs. LIG ES SPAC
Performance |
| Timeline |
| CG Hi Tech |
| LIG ES SPAC |
CG Hi and LIG ES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CG Hi and LIG ES
The main advantage of trading using opposite CG Hi and LIG ES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CG Hi position performs unexpectedly, LIG ES 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 LIG ES will offset losses from the drop in LIG ES's long position.The idea behind CG Hi Tech and LIG ES SPAC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| LIG ES vs. Display Tech Co | LIG ES vs. CG Hi Tech | LIG ES vs. Daesung Hi Tech Co | LIG ES vs. Lotte Data Communication |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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