Correlation Between Sam Yang and LG Chemicals
Can any of the company-specific risk be diversified away by investing in both Sam Yang 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 Sam Yang and LG Chemicals 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 Chemicals, you can compare the effects of market volatilities on Sam Yang 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 Sam Yang with a short position of LG Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sam Yang and LG Chemicals.
Diversification Opportunities for Sam Yang and LG Chemicals
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sam and 051910 is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Sam Yang Foods and LG Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chemicals 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 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 Sam Yang i.e., Sam Yang and LG Chemicals go up and down completely randomly.
Pair Corralation between Sam Yang and LG Chemicals
Assuming the 90 days trading horizon Sam Yang Foods is expected to generate 0.84 times more return on investment than LG Chemicals. However, Sam Yang Foods is 1.19 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 -0.32 per unit of risk. If you would invest 73,400,000 in Sam Yang Foods on November 6, 2024 and sell it today you would lose (5,000,000) from holding Sam Yang Foods or give up 6.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sam Yang Foods vs. LG Chemicals
Performance |
| Timeline |
| Sam Yang Foods |
| LG Chemicals |
Sam Yang and LG Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sam Yang and LG Chemicals
The main advantage of trading using opposite Sam Yang and LG Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sam Yang 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.| Sam Yang vs. Hyosung Advanced Materials | Sam Yang vs. InnoTherapy | Sam Yang vs. INNOX Advanced Materials | Sam Yang vs. Infinitt Healthcare Co |
| LG Chemicals vs. Daou Data Corp | LG Chemicals vs. NH Investment Securities | LG Chemicals vs. Nh Investment And | LG Chemicals vs. Miwon Chemicals 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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