Correlation Between Shinil Industrial and LG Household
Can any of the company-specific risk be diversified away by investing in both Shinil Industrial and LG Household 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 Shinil Industrial and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinil Industrial Co and LG Household Healthcare, you can compare the effects of market volatilities on Shinil Industrial and LG Household 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 Shinil Industrial with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinil Industrial and LG Household.
Diversification Opportunities for Shinil Industrial and LG Household
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shinil and 051905 is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Shinil Industrial Co and LG Household Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Household Healthcare and Shinil Industrial 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 Shinil Industrial Co are associated (or correlated) with LG Household. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Household Healthcare has no effect on the direction of Shinil Industrial i.e., Shinil Industrial and LG Household go up and down completely randomly.
Pair Corralation between Shinil Industrial and LG Household
Assuming the 90 days trading horizon Shinil Industrial Co is expected to generate 1.23 times more return on investment than LG Household. However, Shinil Industrial is 1.23 times more volatile than LG Household Healthcare. It trades about -0.03 of its potential returns per unit of risk. LG Household Healthcare is currently generating about -0.15 per unit of risk. If you would invest 148,241 in Shinil Industrial Co on October 14, 2024 and sell it today you would lose (5,541) from holding Shinil Industrial Co or give up 3.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinil Industrial Co vs. LG Household Healthcare
Performance |
| Timeline |
| Shinil Industrial |
| LG Household Healthcare |
Shinil Industrial and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinil Industrial and LG Household
The main advantage of trading using opposite Shinil Industrial and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinil Industrial position performs unexpectedly, LG Household 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 Household will offset losses from the drop in LG Household's long position.| Shinil Industrial vs. Korean Air Lines | Shinil Industrial vs. Jeju Air Co | Shinil Industrial vs. Wireless Power Amplifier | Shinil Industrial vs. Tway Air Co |
| LG Household vs. Cheryong Industrial CoLtd | LG Household vs. Heungkuk Metaltech CoLtd | LG Household vs. Shinil Industrial Co | LG Household vs. Mgame Corp |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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