Correlation Between Sung Bo and LG Chemicals
Can any of the company-specific risk be diversified away by investing in both Sung Bo and LG Chemicals 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 Sung Bo and LG Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sung Bo Chemicals and LG Chemicals, you can compare the effects of market volatilities on Sung Bo and LG Chemicals 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 Sung Bo with a short position of LG Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sung Bo and LG Chemicals.
Diversification Opportunities for Sung Bo and LG Chemicals
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sung and 051910 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sung Bo Chemicals and LG Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chemicals and Sung Bo 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 Sung Bo Chemicals are associated (or correlated) with LG Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chemicals has no effect on the direction of Sung Bo i.e., Sung Bo and LG Chemicals go up and down completely randomly.
Pair Corralation between Sung Bo and LG Chemicals
Assuming the 90 days trading horizon Sung Bo Chemicals is expected to generate 0.27 times more return on investment than LG Chemicals. However, Sung Bo Chemicals is 3.65 times less risky than LG Chemicals. It trades about -0.19 of its potential returns per unit of risk. LG Chemicals is currently generating about -0.1 per unit of risk. If you would invest 262,000 in Sung Bo Chemicals on August 30, 2024 and sell it today you would lose (7,000) from holding Sung Bo Chemicals or give up 2.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sung Bo Chemicals vs. LG Chemicals
Performance |
| Timeline |
| Sung Bo Chemicals |
| LG Chemicals |
Sung Bo and LG Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sung Bo and LG Chemicals
The main advantage of trading using opposite Sung Bo and LG Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sung Bo position performs unexpectedly, LG Chemicals 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 Chemicals will offset losses from the drop in LG Chemicals' long position.| Sung Bo vs. AptaBio Therapeutics | Sung Bo vs. Daewoo SBI SPAC | Sung Bo vs. Dream Security co | Sung Bo vs. Microfriend |
| LG Chemicals vs. Woori Technology | LG Chemicals vs. Lion Chemtech Co | LG Chemicals vs. Sungchang Autotech Co | LG Chemicals vs. POSCO M TECH Co |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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