Correlation Between LX Semicon and Cube Entertainment

Can any of the company-specific risk be diversified away by investing in both LX Semicon and Cube Entertainment 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 LX Semicon and Cube Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LX Semicon Co and Cube Entertainment, you can compare the effects of market volatilities on LX Semicon and Cube Entertainment 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 LX Semicon with a short position of Cube Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of LX Semicon and Cube Entertainment.

Diversification Opportunities for LX Semicon and Cube Entertainment

-0.62

Correlation Coefficient

LX Semicon  Cube Entertainment

Excellent diversification

The 3 months correlation between 108320 and Cube is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding LX Semicon Co and Cube Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cube Entertainment and LX Semicon 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 LX Semicon Co are associated (or correlated) with Cube Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cube Entertainment has no effect on the direction of LX Semicon i.e., LX Semicon and Cube Entertainment go up and down completely randomly.

Pair Corralation between LX Semicon and Cube Entertainment

Assuming the 90 days trading horizon LX Semicon Co is expected to under-perform the Cube Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, LX Semicon Co is 1.5 times less risky than Cube Entertainment. The stock trades about -0.02 of its potential returns per unit of risk. The Cube Entertainment is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,492,000  in Cube Entertainment on September 20, 2024 and sell it today you would earn a total of  141,000  from holding Cube Entertainment or generate 9.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

LX Semicon Co  vs.  Cube Entertainment

LX Semicon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LX Semicon Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LX Semicon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cube Entertainment

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cube Entertainment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cube Entertainment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LX Semicon and Cube Entertainment

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

The idea behind LX Semicon Co and Cube Entertainment 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.