Correlation Between SV Investment and LB Investment
Can any of the company-specific risk be diversified away by investing in both SV Investment and LB Investment 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 SV Investment and LB Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SV Investment and LB Investment, you can compare the effects of market volatilities on SV Investment and LB Investment 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 SV Investment with a short position of LB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of SV Investment and LB Investment.
Diversification Opportunities for SV Investment and LB Investment
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between 289080 and 309960 is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding SV Investment and LB Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Investment and SV Investment 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 SV Investment are associated (or correlated) with LB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Investment has no effect on the direction of SV Investment i.e., SV Investment and LB Investment go up and down completely randomly.
Pair Corralation between SV Investment and LB Investment
Assuming the 90 days trading horizon SV Investment is expected to under-perform the LB Investment. In addition to that, SV Investment is 2.36 times more volatile than LB Investment. It trades about -0.24 of its total potential returns per unit of risk. LB Investment is currently generating about -0.22 per unit of volatility. If you would invest 388,500 in LB Investment on August 25, 2024 and sell it today you would lose (18,000) from holding LB Investment or give up 4.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SV Investment vs. LB Investment
Performance |
| Timeline |
| SV Investment |
| LB Investment |
SV Investment and LB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SV Investment and LB Investment
The main advantage of trading using opposite SV Investment and LB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SV Investment position performs unexpectedly, LB Investment 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 LB Investment will offset losses from the drop in LB Investment's long position.| SV Investment vs. Atinum Investment Co | SV Investment vs. SBI Investment KOREA | SV Investment vs. Daesung Private Equity | SV Investment vs. Busan Industrial Co |
| LB Investment vs. BIT Computer Co | LB Investment vs. Lotte Data Communication | LB Investment vs. Shinsegae Information Communication | LB Investment vs. LG Display 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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