Correlation Between Coloray International and LB Investment
Can any of the company-specific risk be diversified away by investing in both Coloray International and LB Investment 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 Coloray International and LB Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coloray International Investment and LB Investment, you can compare the effects of market volatilities on Coloray International and LB Investment 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 Coloray International with a short position of LB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coloray International and LB Investment.
Diversification Opportunities for Coloray International and LB Investment
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Coloray and 309960 is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Coloray International Investme and LB Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LB Investment and Coloray International 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 Coloray International Investment are associated (or correlated) with LB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LB Investment has no effect on the direction of Coloray International i.e., Coloray International and LB Investment go up and down completely randomly.
Pair Corralation between Coloray International and LB Investment
Assuming the 90 days trading horizon Coloray International Investment is expected to under-perform the LB Investment. In addition to that, Coloray International is 2.89 times more volatile than LB Investment. It trades about -0.17 of its total potential returns per unit of risk. LB Investment is currently generating about -0.43 per unit of volatility. If you would invest 395,000 in LB Investment on August 24, 2024 and sell it today you would lose (31,500) from holding LB Investment or give up 7.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coloray International Investme vs. LB Investment
Performance |
| Timeline |
| Coloray International |
| LB Investment |
Coloray International and LB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coloray International and LB Investment
The main advantage of trading using opposite Coloray International and LB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coloray International position performs unexpectedly, LB Investment 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 LB Investment will offset losses from the drop in LB Investment's long position.| Coloray International vs. J Steel Co | Coloray International vs. Daechang Steel Co | Coloray International vs. BGF Retail Co | Coloray International vs. Dong A Steel Technology |
| LB Investment vs. Samsung Electronics Co | LB Investment vs. Samsung Electronics Co | LB Investment vs. LG Energy Solution | LB Investment vs. SK Hynix |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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