Correlation Between LB Investment and Daesung Industrial
Can any of the company-specific risk be diversified away by investing in both LB Investment and Daesung Industrial 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 Daesung Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Investment and Daesung Industrial Co, you can compare the effects of market volatilities on LB Investment and Daesung Industrial 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 Daesung Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Investment and Daesung Industrial.
Diversification Opportunities for LB Investment and Daesung Industrial
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 309960 and Daesung is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding LB Investment and Daesung Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daesung Industrial 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 Daesung Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daesung Industrial has no effect on the direction of LB Investment i.e., LB Investment and Daesung Industrial go up and down completely randomly.
Pair Corralation between LB Investment and Daesung Industrial
Assuming the 90 days trading horizon LB Investment is expected to under-perform the Daesung Industrial. But the stock apears to be less risky and, when comparing its historical volatility, LB Investment is 1.3 times less risky than Daesung Industrial. The stock trades about -0.26 of its potential returns per unit of risk. The Daesung Industrial Co is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 329,000 in Daesung Industrial Co on November 7, 2024 and sell it today you would lose (11,000) from holding Daesung Industrial Co or give up 3.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LB Investment vs. Daesung Industrial Co
Performance |
| Timeline |
| LB Investment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Daesung Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
LB Investment and Daesung Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Investment and Daesung Industrial
The main advantage of trading using opposite LB Investment and Daesung Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Investment position performs unexpectedly, Daesung Industrial 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 Daesung Industrial will offset losses from the drop in Daesung Industrial's long position.| LB Investment vs. Korea Information Communications | LB Investment vs. Digital Imaging Technology | LB Investment vs. Puloon Technology | LB Investment vs. Shinhan Inverse Copper |
| Daesung Industrial vs. Samsung Publishing Co | Daesung Industrial vs. Narae Nanotech Corp | Daesung Industrial vs. Choil Aluminum | Daesung Industrial 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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