Correlation Between LB Investment and BIT Computer
Can any of the company-specific risk be diversified away by investing in both LB Investment and BIT Computer 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 LB Investment and BIT Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Investment and BIT Computer Co, you can compare the effects of market volatilities on LB Investment and BIT Computer 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 LB Investment with a short position of BIT Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Investment and BIT Computer.
Diversification Opportunities for LB Investment and BIT Computer
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 309960 and BIT is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding LB Investment and BIT Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIT Computer and LB 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 LB Investment are associated (or correlated) with BIT Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIT Computer has no effect on the direction of LB Investment i.e., LB Investment and BIT Computer go up and down completely randomly.
Pair Corralation between LB Investment and BIT Computer
Assuming the 90 days trading horizon LB Investment is expected to generate 0.83 times more return on investment than BIT Computer. However, LB Investment is 1.2 times less risky than BIT Computer. It trades about -0.14 of its potential returns per unit of risk. BIT Computer Co is currently generating about -0.17 per unit of risk. If you would invest 420,000 in LB Investment on August 25, 2024 and sell it today you would lose (49,500) from holding LB Investment or give up 11.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.33% |
| Values | Daily Returns |
LB Investment vs. BIT Computer Co
Performance |
| Timeline |
| LB Investment |
| BIT Computer |
LB Investment and BIT Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Investment and BIT Computer
The main advantage of trading using opposite LB Investment and BIT Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Investment position performs unexpectedly, BIT Computer 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 BIT Computer will offset losses from the drop in BIT Computer's long position.| LB Investment vs. BIT Computer Co | LB Investment vs. Lotte Data Communication | LB Investment vs. Shinsegae Information Communication | LB Investment vs. LG Display Co |
| BIT Computer vs. Medy Tox | BIT Computer vs. Genexine | BIT Computer vs. Busan Industrial Co | BIT Computer vs. Busan Ind |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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