Correlation Between Sam Yang and LG Household
Can any of the company-specific risk be diversified away by investing in both Sam Yang 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 Sam Yang and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sam Yang Foods and LG Household Healthcare, you can compare the effects of market volatilities on Sam Yang 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 Sam Yang with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sam Yang and LG Household.
Diversification Opportunities for Sam Yang and LG Household
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sam and 051900 is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sam Yang Foods 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 Sam Yang 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 Sam Yang Foods 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 Sam Yang i.e., Sam Yang and LG Household go up and down completely randomly.
Pair Corralation between Sam Yang and LG Household
Assuming the 90 days trading horizon Sam Yang Foods is expected to generate 1.4 times more return on investment than LG Household. However, Sam Yang is 1.4 times more volatile than LG Household Healthcare. It trades about 0.12 of its potential returns per unit of risk. LG Household Healthcare is currently generating about -0.06 per unit of risk. If you would invest 12,038,400 in Sam Yang Foods on October 13, 2024 and sell it today you would earn a total of 62,961,600 from holding Sam Yang Foods or generate 523.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sam Yang Foods vs. LG Household Healthcare
Performance |
| Timeline |
| Sam Yang Foods |
| LG Household Healthcare |
Sam Yang and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sam Yang and LG Household
The main advantage of trading using opposite Sam Yang and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sam Yang 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.| Sam Yang vs. Sempio Foods Co | Sam Yang vs. CJ Seafood Corp | Sam Yang vs. FoodNamoo | Sam Yang vs. Youl Chon Chemical |
| LG Household vs. Bosung Power Technology | LG Household vs. BIT Computer Co | LG Household vs. KG Eco Technology | LG Household vs. Samlip General Foods |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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