Correlation Between LG Clean and Medacta Group

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

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

Diversification Opportunities for LG Clean and Medacta Group

0.0

Correlation Coefficient

LG Clean  Medacta Group

Pay attention - limited upside

The 3 months correlation between GLUG and Medacta is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LG Clean Water and Medacta Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medacta Group SA and LG Clean 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 LG Clean Water are associated (or correlated) with Medacta Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medacta Group SA has no effect on the direction of LG Clean i.e., LG Clean and Medacta Group go up and down completely randomly.

Pair Corralation between LG Clean and Medacta Group

If you would invest  1,581  in LG Clean Water on October 24, 2024 and sell it today you would earn a total of  46.00  from holding LG Clean Water or generate 2.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

LG Clean Water  vs.  Medacta Group SA

LG Clean Water

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LG Clean Water are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, LG Clean is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Medacta Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medacta Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Medacta Group is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with LG Clean and Medacta Group

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

The idea behind LG Clean Water and Medacta Group SA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.