Correlation Between GS Retail and LG Household
Can any of the company-specific risk be diversified away by investing in both GS Retail 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 GS Retail and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GS Retail Co and LG Household Healthcare, you can compare the effects of market volatilities on GS Retail 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 GS Retail with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Retail and LG Household.
Diversification Opportunities for GS Retail and LG Household
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 007070 and 051905 is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding GS Retail Co 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 GS Retail 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 GS Retail Co 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 GS Retail i.e., GS Retail and LG Household go up and down completely randomly.
Pair Corralation between GS Retail and LG Household
Assuming the 90 days trading horizon GS Retail Co is expected to generate 0.83 times more return on investment than LG Household. However, GS Retail Co is 1.2 times less risky than LG Household. It trades about -0.02 of its potential returns per unit of risk. LG Household Healthcare is currently generating about -0.06 per unit of risk. If you would invest 2,883,729 in GS Retail Co on August 30, 2024 and sell it today you would lose (568,729) from holding GS Retail Co or give up 19.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GS Retail Co vs. LG Household Healthcare
Performance |
| Timeline |
| GS Retail |
| LG Household Healthcare |
GS Retail and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GS Retail and LG Household
The main advantage of trading using opposite GS Retail and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GS Retail 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.| GS Retail vs. AptaBio Therapeutics | GS Retail vs. Daewoo SBI SPAC | GS Retail vs. Dream Security co | GS Retail vs. Microfriend |
| LG Household vs. LG Household Healthcare | LG Household vs. Amorepacific Corp | LG Household vs. CKH Food Health |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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