Correlation Between LB Investment and Ilji Technology

Can any of the company-specific risk be diversified away by investing in both LB Investment and Ilji Technology 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 LB Investment and Ilji Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for LB Investment and Ilji Technology

0.62

Correlation Coefficient

LB Investment  Ilji Technology

Poor diversification

The 3 months correlation between 309960 and Ilji is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding LB Investment and Ilji Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ilji Technology and LB Investment 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 LB Investment are associated (or correlated) with Ilji Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ilji Technology has no effect on the direction of LB Investment i.e., LB Investment and Ilji Technology go up and down completely randomly.

Pair Corralation between LB Investment and Ilji Technology

Assuming the 90 days trading horizon LB Investment is expected to generate 4.8 times more return on investment than Ilji Technology. However, LB Investment is 4.8 times more volatile than Ilji Technology Co. It trades about 0.18 of its potential returns per unit of risk. Ilji Technology Co is currently generating about 0.42 per unit of risk. If you would invest  297,000  in LB Investment on December 4, 2024 and sell it today you would earn a total of  80,000  from holding LB Investment or generate 26.94% return on investment over 90 days.

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

LB Investment  vs.  Ilji Technology Co

LB Investment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LB Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, LB Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Ilji Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ilji Technology Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ilji Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LB Investment and Ilji Technology

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

The idea behind LB Investment and Ilji Technology Co 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.