Correlation Between LB Investment and Orbitech
Can any of the company-specific risk be diversified away by investing in both LB Investment and Orbitech 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 Orbitech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Investment and Orbitech Co, you can compare the effects of market volatilities on LB Investment and Orbitech 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 Orbitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Investment and Orbitech.
Diversification Opportunities for LB Investment and Orbitech
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 309960 and Orbitech is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding LB Investment and Orbitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbitech 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 Orbitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbitech has no effect on the direction of LB Investment i.e., LB Investment and Orbitech go up and down completely randomly.
Pair Corralation between LB Investment and Orbitech
Assuming the 90 days trading horizon LB Investment is expected to under-perform the Orbitech. But the stock apears to be less risky and, when comparing its historical volatility, LB Investment is 1.22 times less risky than Orbitech. The stock trades about -0.12 of its potential returns per unit of risk. The Orbitech Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 234,000 in Orbitech Co on October 10, 2024 and sell it today you would lose (29,500) from holding Orbitech Co or give up 12.61% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
LB Investment vs. Orbitech Co
Performance |
Timeline |
LB Investment |
Orbitech |
LB Investment and Orbitech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LB Investment and Orbitech
The main advantage of trading using opposite LB Investment and Orbitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Investment position performs unexpectedly, Orbitech 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 Orbitech will offset losses from the drop in Orbitech's long position.LB Investment vs. Samsung Electronics Co | LB Investment vs. Samsung Electronics Co | LB Investment vs. LG Energy Solution | LB Investment vs. SK Hynix |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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