Correlation Between Visang Education and LG Chemicals

Can any of the company-specific risk be diversified away by investing in both Visang Education and LG Chemicals 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 Visang Education and LG Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Visang Education and LG Chemicals, you can compare the effects of market volatilities on Visang Education and LG Chemicals 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 Visang Education with a short position of LG Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visang Education and LG Chemicals.

Diversification Opportunities for Visang Education and LG Chemicals

-0.33

Correlation Coefficient

Visang Education  LG Chemicals

Very good diversification

The 3 months correlation between Visang and 051910 is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Visang Education and LG Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chemicals and Visang Education 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 Visang Education are associated (or correlated) with LG Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chemicals has no effect on the direction of Visang Education i.e., Visang Education and LG Chemicals go up and down completely randomly.

Pair Corralation between Visang Education and LG Chemicals

Assuming the 90 days trading horizon Visang Education is expected to generate 1.93 times more return on investment than LG Chemicals. However, Visang Education is 1.93 times more volatile than LG Chemicals. It trades about 0.03 of its potential returns per unit of risk. LG Chemicals is currently generating about -0.07 per unit of risk. If you would invest  459,500  in Visang Education on September 5, 2024 and sell it today you would earn a total of  10,500  from holding Visang Education or generate 2.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Visang Education  vs.  LG Chemicals

Visang Education

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Visang Education are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Visang Education may actually be approaching a critical reversion point that can send shares even higher in January 2025.

LG Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LG Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Visang Education and LG Chemicals

The main advantage of trading using opposite Visang Education and LG Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visang Education position performs unexpectedly, LG Chemicals 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 Chemicals will offset losses from the drop in LG Chemicals' long position.

The idea behind Visang Education and LG Chemicals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.