Correlation Between LB Investment and A Tech
Can any of the company-specific risk be diversified away by investing in both LB Investment and A Tech 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 A Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Investment and A Tech Solution Co, you can compare the effects of market volatilities on LB Investment and A Tech 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 A Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Investment and A Tech.
Diversification Opportunities for LB Investment and A Tech
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 309960 and 071670 is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding LB Investment and A Tech Solution Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A Tech Solution 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 A Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A Tech Solution has no effect on the direction of LB Investment i.e., LB Investment and A Tech go up and down completely randomly.
Pair Corralation between LB Investment and A Tech
Assuming the 90 days trading horizon LB Investment is expected to under-perform the A Tech. In addition to that, LB Investment is 1.19 times more volatile than A Tech Solution Co. It trades about -0.05 of its total potential returns per unit of risk. A Tech Solution Co is currently generating about -0.02 per unit of volatility. If you would invest 964,000 in A Tech Solution Co on October 14, 2024 and sell it today you would lose (351,000) from holding A Tech Solution Co or give up 36.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.87% |
| Values | Daily Returns |
LB Investment vs. A Tech Solution Co
Performance |
| Timeline |
| LB Investment |
| A Tech Solution |
LB Investment and A Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Investment and A Tech
The main advantage of trading using opposite LB Investment and A Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Investment position performs unexpectedly, A Tech 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 A Tech will offset losses from the drop in A Tech's long position.| LB Investment vs. A Tech Solution Co | LB Investment vs. KMH Hitech Co | LB Investment vs. Yura Tech Co | LB Investment vs. RFTech Co |
| A Tech vs. LB Investment | A Tech vs. EBEST Investment Securities | A Tech vs. Woori Technology Investment | A Tech vs. KTB Investment Securities |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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