Correlation Between Samsung Electronics and LG Uplus
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and LG Uplus 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 Samsung Electronics and LG Uplus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and LG Uplus, you can compare the effects of market volatilities on Samsung Electronics and LG Uplus 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 Samsung Electronics with a short position of LG Uplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and LG Uplus.
Diversification Opportunities for Samsung Electronics and LG Uplus
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and 032640 is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and LG Uplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Uplus and Samsung Electronics 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 Samsung Electronics Co are associated (or correlated) with LG Uplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Uplus has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and LG Uplus go up and down completely randomly.
Pair Corralation between Samsung Electronics and LG Uplus
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the LG Uplus. In addition to that, Samsung Electronics is 1.01 times more volatile than LG Uplus. It trades about -0.29 of its total potential returns per unit of risk. LG Uplus is currently generating about -0.04 per unit of volatility. If you would invest 1,109,000 in LG Uplus on September 23, 2024 and sell it today you would lose (20,000) from holding LG Uplus or give up 1.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. LG Uplus
Performance |
| Timeline |
| Samsung Electronics |
| LG Uplus |
Samsung Electronics and LG Uplus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and LG Uplus
The main advantage of trading using opposite Samsung Electronics and LG Uplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, LG Uplus 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 Uplus will offset losses from the drop in LG Uplus' long position.| Samsung Electronics vs. LG Corp | Samsung Electronics vs. Zinus Inc | Samsung Electronics vs. Humasis Co | Samsung Electronics vs. JYP Entertainment |
| LG Uplus vs. Samsung Electronics Co | LG Uplus vs. Samsung Electronics Co | LG Uplus vs. KB Financial Group | LG Uplus vs. Shinhan Financial Group |
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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