Correlation Between GS Retail and LG Chemicals
Can any of the company-specific risk be diversified away by investing in both GS Retail and LG Chemicals 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 Chemicals 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 Chemicals, you can compare the effects of market volatilities on GS Retail and LG Chemicals 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 Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Retail and LG Chemicals.
Diversification Opportunities for GS Retail and LG Chemicals
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 007070 and 051910 is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding GS Retail Co and LG Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chemicals 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 Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chemicals has no effect on the direction of GS Retail i.e., GS Retail and LG Chemicals go up and down completely randomly.
Pair Corralation between GS Retail and LG Chemicals
Assuming the 90 days trading horizon GS Retail Co is expected to generate 0.73 times more return on investment than LG Chemicals. However, GS Retail Co is 1.37 times less risky than LG Chemicals. It trades about -0.02 of its potential returns per unit of risk. LG Chemicals is currently generating about -0.06 per unit of risk. If you would invest 2,859,537 in GS Retail Co on August 27, 2024 and sell it today you would lose (599,537) from holding GS Retail Co or give up 20.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GS Retail Co vs. LG Chemicals
Performance |
| Timeline |
| GS Retail |
| LG Chemicals |
GS Retail and LG Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GS Retail and LG Chemicals
The main advantage of trading using opposite GS Retail and LG Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GS Retail position performs unexpectedly, LG Chemicals 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 Chemicals will offset losses from the drop in LG Chemicals' long position.| GS Retail vs. AptaBio Therapeutics | GS Retail vs. Daewoo SBI SPAC | GS Retail vs. Dream Security co | GS Retail vs. Microfriend |
| LG Chemicals vs. Cloud Air CoLtd | LG Chemicals vs. Iljin Display | LG Chemicals vs. Kakao Games Corp | LG Chemicals vs. Tway Air Co |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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