Correlation Between FOODWELL and LG Electronics
Can any of the company-specific risk be diversified away by investing in both FOODWELL and LG Electronics 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 Electronics 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 Electronics, you can compare the effects of market volatilities on FOODWELL and LG Electronics 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 Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of FOODWELL and LG Electronics.
Diversification Opportunities for FOODWELL and LG Electronics
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FOODWELL and 066570 is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding FOODWELL Co and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics 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 Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics has no effect on the direction of FOODWELL i.e., FOODWELL and LG Electronics go up and down completely randomly.
Pair Corralation between FOODWELL and LG Electronics
Assuming the 90 days trading horizon FOODWELL Co is expected to generate 0.92 times more return on investment than LG Electronics. However, FOODWELL Co is 1.09 times less risky than LG Electronics. It trades about 0.03 of its potential returns per unit of risk. LG Electronics is currently generating about -0.02 per unit of risk. If you would invest 544,896 in FOODWELL Co on November 19, 2024 and sell it today you would earn a total of 91,104 from holding FOODWELL Co or generate 16.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FOODWELL Co vs. LG Electronics
Performance |
| Timeline |
| FOODWELL |
| LG Electronics |
FOODWELL and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FOODWELL and LG Electronics
The main advantage of trading using opposite FOODWELL and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FOODWELL position performs unexpectedly, LG Electronics 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 Electronics will offset losses from the drop in LG Electronics' long position.| FOODWELL vs. InfoBank | FOODWELL vs. Samsung Life Insurance | FOODWELL vs. Dongbu Insurance Co | FOODWELL vs. Pureun Mutual Savings |
| LG Electronics vs. Ssangyong Information Communication | LG Electronics vs. Daiyang Metal Co | LG Electronics vs. Insung Information Co | LG Electronics vs. Hanjoo Light Metal |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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