Correlation Between RPBio and LG Household
Can any of the company-specific risk be diversified away by investing in both RPBio and LG Household 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 RPBio and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RPBio Inc and LG Household Healthcare, you can compare the effects of market volatilities on RPBio and LG Household 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 RPBio with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of RPBio and LG Household.
Diversification Opportunities for RPBio and LG Household
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RPBio and 051900 is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding RPBio Inc and LG Household Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Household Healthcare and RPBio 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 RPBio Inc are associated (or correlated) with LG Household. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Household Healthcare has no effect on the direction of RPBio i.e., RPBio and LG Household go up and down completely randomly.
Pair Corralation between RPBio and LG Household
Assuming the 90 days trading horizon RPBio Inc is expected to generate 1.51 times more return on investment than LG Household. However, RPBio is 1.51 times more volatile than LG Household Healthcare. It trades about 0.12 of its potential returns per unit of risk. LG Household Healthcare is currently generating about -0.15 per unit of risk. If you would invest 497,500 in RPBio Inc on October 28, 2024 and sell it today you would earn a total of 17,500 from holding RPBio Inc or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RPBio Inc vs. LG Household Healthcare
Performance |
| Timeline |
| RPBio Inc |
| LG Household Healthcare |
RPBio and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RPBio and LG Household
The main advantage of trading using opposite RPBio and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RPBio position performs unexpectedly, LG Household 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 Household will offset losses from the drop in LG Household's long position.| RPBio vs. Foodnamoo | RPBio vs. Seoul Food Industrial | RPBio vs. Samlip General Foods | RPBio vs. Hanwha Life Insurance |
| LG Household vs. Busan Industrial Co | LG Household vs. Busan Ind | LG Household vs. RPBio Inc | LG Household vs. Finebesteel |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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