Correlation Between FOODWELL and LG Innotek
Can any of the company-specific risk be diversified away by investing in both FOODWELL and LG Innotek 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 FOODWELL and LG Innotek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FOODWELL Co and LG Innotek Co, you can compare the effects of market volatilities on FOODWELL and LG Innotek 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 FOODWELL with a short position of LG Innotek. Check out your portfolio center. Please also check ongoing floating volatility patterns of FOODWELL and LG Innotek.
Diversification Opportunities for FOODWELL and LG Innotek
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FOODWELL and 011070 is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding FOODWELL Co and LG Innotek Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Innotek and FOODWELL 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 FOODWELL Co are associated (or correlated) with LG Innotek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Innotek has no effect on the direction of FOODWELL i.e., FOODWELL and LG Innotek go up and down completely randomly.
Pair Corralation between FOODWELL and LG Innotek
Assuming the 90 days trading horizon FOODWELL Co is expected to generate 0.68 times more return on investment than LG Innotek. However, FOODWELL Co is 1.46 times less risky than LG Innotek. It trades about 0.0 of its potential returns per unit of risk. LG Innotek Co is currently generating about -0.03 per unit of risk. If you would invest 562,301 in FOODWELL Co on September 13, 2024 and sell it today you would lose (48,301) from holding FOODWELL Co or give up 8.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FOODWELL Co vs. LG Innotek Co
Performance |
| Timeline |
| FOODWELL |
| LG Innotek |
FOODWELL and LG Innotek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FOODWELL and LG Innotek
The main advantage of trading using opposite FOODWELL and LG Innotek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FOODWELL position performs unexpectedly, LG Innotek 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 Innotek will offset losses from the drop in LG Innotek's long position.| FOODWELL vs. Korea New Network | FOODWELL vs. ICD Co | FOODWELL vs. DYPNF CoLtd | FOODWELL vs. Solution Advanced Technology |
| LG Innotek vs. FOODWELL Co | LG Innotek vs. Sam Yang Foods | LG Innotek vs. Ecoplastic | LG Innotek vs. LS Materials |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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