Correlation Between LPN Development and SGF Capital
Can any of the company-specific risk be diversified away by investing in both LPN Development and SGF Capital 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 LPN Development and SGF Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LPN Development Public and SGF Capital Public, you can compare the effects of market volatilities on LPN Development and SGF Capital 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 LPN Development with a short position of SGF Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPN Development and SGF Capital.
Diversification Opportunities for LPN Development and SGF Capital
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LPN and SGF is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding LPN Development Public and SGF Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGF Capital Public and LPN Development 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 LPN Development Public are associated (or correlated) with SGF Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGF Capital Public has no effect on the direction of LPN Development i.e., LPN Development and SGF Capital go up and down completely randomly.
Pair Corralation between LPN Development and SGF Capital
Assuming the 90 days trading horizon LPN Development Public is expected to generate 1.0 times more return on investment than SGF Capital. However, LPN Development Public is 1.0 times less risky than SGF Capital. It trades about 0.04 of its potential returns per unit of risk. SGF Capital Public is currently generating about 0.04 per unit of risk. If you would invest 426.00 in LPN Development Public on September 13, 2024 and sell it today you would lose (142.00) from holding LPN Development Public or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPN Development Public vs. SGF Capital Public
Performance |
| Timeline |
| LPN Development Public |
| SGF Capital Public |
LPN Development and SGF Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPN Development and SGF Capital
The main advantage of trading using opposite LPN Development and SGF Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPN Development position performs unexpectedly, SGF Capital 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 SGF Capital will offset losses from the drop in SGF Capital's long position.| LPN Development vs. Wave Entertainment Public | LPN Development vs. Vibhavadi Medical Center | LPN Development vs. VGI Public | LPN Development vs. WHA Public |
| SGF Capital vs. Power Solution Technologies | SGF Capital vs. RS Public | SGF Capital vs. Siam Steel International | SGF Capital vs. RPCG Public |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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