Correlation Between CS BEARING and LG Chemicals
Can any of the company-specific risk be diversified away by investing in both CS BEARING and LG Chemicals 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 CS BEARING and LG Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CS BEARING CoLtd and LG Chemicals, you can compare the effects of market volatilities on CS BEARING and LG Chemicals 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 CS BEARING with a short position of LG Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of CS BEARING and LG Chemicals.
Diversification Opportunities for CS BEARING and LG Chemicals
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 297090 and 051910 is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding CS BEARING CoLtd and LG Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chemicals and CS BEARING 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 CS BEARING CoLtd are associated (or correlated) with LG Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chemicals has no effect on the direction of CS BEARING i.e., CS BEARING and LG Chemicals go up and down completely randomly.
Pair Corralation between CS BEARING and LG Chemicals
Assuming the 90 days trading horizon CS BEARING CoLtd is expected to under-perform the LG Chemicals. In addition to that, CS BEARING is 1.32 times more volatile than LG Chemicals. It trades about -0.26 of its total potential returns per unit of risk. LG Chemicals is currently generating about -0.16 per unit of volatility. If you would invest 33,900,000 in LG Chemicals on August 29, 2024 and sell it today you would lose (3,200,000) from holding LG Chemicals or give up 9.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CS BEARING CoLtd vs. LG Chemicals
Performance |
| Timeline |
| CS BEARING CoLtd |
| LG Chemicals |
CS BEARING and LG Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CS BEARING and LG Chemicals
The main advantage of trading using opposite CS BEARING and LG Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CS BEARING position performs unexpectedly, LG Chemicals 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 Chemicals will offset losses from the drop in LG Chemicals' long position.The idea behind CS BEARING CoLtd and LG Chemicals 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.| LG Chemicals vs. Hyundai Industrial Co | LG Chemicals vs. Songwon Industrial Co | LG Chemicals vs. Daiyang Metal Co | LG Chemicals vs. Pungguk Ethanol Industrial |
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.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |