Correlation Between Tae Kyung and LG Household
Can any of the company-specific risk be diversified away by investing in both Tae Kyung 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 Tae Kyung and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tae Kyung Chemical and LG Household Healthcare, you can compare the effects of market volatilities on Tae Kyung 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 Tae Kyung with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tae Kyung and LG Household.
Diversification Opportunities for Tae Kyung and LG Household
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tae and 051900 is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Tae Kyung Chemical 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 Tae Kyung 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 Tae Kyung Chemical 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 Tae Kyung i.e., Tae Kyung and LG Household go up and down completely randomly.
Pair Corralation between Tae Kyung and LG Household
Assuming the 90 days trading horizon Tae Kyung Chemical is expected to generate 1.57 times more return on investment than LG Household. However, Tae Kyung is 1.57 times more volatile than LG Household Healthcare. It trades about -0.04 of its potential returns per unit of risk. LG Household Healthcare is currently generating about -0.07 per unit of risk. If you would invest 1,124,000 in Tae Kyung Chemical on November 4, 2024 and sell it today you would lose (17,000) from holding Tae Kyung Chemical or give up 1.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tae Kyung Chemical vs. LG Household Healthcare
Performance |
| Timeline |
| Tae Kyung Chemical |
| LG Household Healthcare |
Tae Kyung and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tae Kyung and LG Household
The main advantage of trading using opposite Tae Kyung and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tae Kyung 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.| Tae Kyung vs. INFINITT Healthcare Co | Tae Kyung vs. Ecoplastic | Tae Kyung vs. Green Cross Medical | Tae Kyung vs. Daejoo Electronic Materials |
| LG Household vs. Samyang Foods Co | LG Household vs. KTB Investment Securities | LG Household vs. FOODWELL Co | LG Household vs. Haitai Confectionery 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |