Correlation Between GS Retail and LG Electronics
Can any of the company-specific risk be diversified away by investing in both GS Retail 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 GS Retail and LG Electronics 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 Electronics Pfd, you can compare the effects of market volatilities on GS Retail 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 GS Retail with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Retail and LG Electronics.
Diversification Opportunities for GS Retail and LG Electronics
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between 007070 and 066575 is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding GS Retail Co and LG Electronics Pfd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics Pfd 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 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 Pfd has no effect on the direction of GS Retail i.e., GS Retail and LG Electronics go up and down completely randomly.
Pair Corralation between GS Retail and LG Electronics
Assuming the 90 days trading horizon GS Retail Co is expected to generate 1.16 times more return on investment than LG Electronics. However, GS Retail is 1.16 times more volatile than LG Electronics Pfd. It trades about 0.01 of its potential returns per unit of risk. LG Electronics Pfd is currently generating about -0.03 per unit of risk. If you would invest 2,366,640 in GS Retail Co on September 4, 2024 and sell it today you would lose (51,640) from holding GS Retail Co or give up 2.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.17% |
| Values | Daily Returns |
GS Retail Co vs. LG Electronics Pfd
Performance |
| Timeline |
| GS Retail |
| LG Electronics Pfd |
GS Retail and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GS Retail and LG Electronics
The main advantage of trading using opposite GS Retail and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GS Retail 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.| GS Retail vs. Eagle Veterinary Technology | GS Retail vs. Keyang Electric Machinery | GS Retail vs. Cots Technology Co | GS Retail vs. Sewoon Medical Co |
| LG Electronics vs. AptaBio Therapeutics | LG Electronics vs. Daewoo SBI SPAC | LG Electronics vs. Dream Security co | LG Electronics vs. Microfriend |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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