Correlation Between LB Investment and IM CoLtd
Can any of the company-specific risk be diversified away by investing in both LB Investment and IM CoLtd 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 IM CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Investment and IM CoLtd, you can compare the effects of market volatilities on LB Investment and IM CoLtd 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 IM CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Investment and IM CoLtd.
Diversification Opportunities for LB Investment and IM CoLtd
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 309960 and 101390 is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding LB Investment and IM CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IM CoLtd 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 IM CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IM CoLtd has no effect on the direction of LB Investment i.e., LB Investment and IM CoLtd go up and down completely randomly.
Pair Corralation between LB Investment and IM CoLtd
Assuming the 90 days trading horizon LB Investment is expected to generate 0.28 times more return on investment than IM CoLtd. However, LB Investment is 3.61 times less risky than IM CoLtd. It trades about -0.13 of its potential returns per unit of risk. IM CoLtd is currently generating about -0.16 per unit of risk. If you would invest 387,000 in LB Investment on August 29, 2024 and sell it today you would lose (11,000) from holding LB Investment or give up 2.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LB Investment vs. IM CoLtd
Performance |
| Timeline |
| LB Investment |
| IM CoLtd |
LB Investment and IM CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Investment and IM CoLtd
The main advantage of trading using opposite LB Investment and IM CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Investment position performs unexpectedly, IM CoLtd 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 IM CoLtd will offset losses from the drop in IM CoLtd's long position.| LB Investment vs. Samsung Electronics Co | LB Investment vs. Samsung Electronics Co | LB Investment vs. LG Energy Solution | LB Investment vs. SK Hynix |
| IM CoLtd vs. Korea Real Estate | IM CoLtd vs. Korea Ratings Co | IM CoLtd vs. IQuest Co | IM CoLtd vs. Wonbang Tech 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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