Correlation Between Heungkuk Metaltech and LG Chem
Can any of the company-specific risk be diversified away by investing in both Heungkuk Metaltech and LG Chem 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 Heungkuk Metaltech and LG Chem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heungkuk Metaltech CoLtd and LG Chem, you can compare the effects of market volatilities on Heungkuk Metaltech and LG Chem 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 Heungkuk Metaltech with a short position of LG Chem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heungkuk Metaltech and LG Chem.
Diversification Opportunities for Heungkuk Metaltech and LG Chem
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Heungkuk and 051915 is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Heungkuk Metaltech CoLtd and LG Chem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chem and Heungkuk Metaltech 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 Heungkuk Metaltech CoLtd are associated (or correlated) with LG Chem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chem has no effect on the direction of Heungkuk Metaltech i.e., Heungkuk Metaltech and LG Chem go up and down completely randomly.
Pair Corralation between Heungkuk Metaltech and LG Chem
Assuming the 90 days trading horizon Heungkuk Metaltech CoLtd is expected to generate 0.45 times more return on investment than LG Chem. However, Heungkuk Metaltech CoLtd is 2.2 times less risky than LG Chem. It trades about -0.05 of its potential returns per unit of risk. LG Chem is currently generating about -0.13 per unit of risk. If you would invest 491,000 in Heungkuk Metaltech CoLtd on August 28, 2024 and sell it today you would lose (8,000) from holding Heungkuk Metaltech CoLtd or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heungkuk Metaltech CoLtd vs. LG Chem
Performance |
| Timeline |
| Heungkuk Metaltech CoLtd |
| LG Chem |
Heungkuk Metaltech and LG Chem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heungkuk Metaltech and LG Chem
The main advantage of trading using opposite Heungkuk Metaltech and LG Chem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heungkuk Metaltech position performs unexpectedly, LG Chem 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 Chem will offset losses from the drop in LG Chem's long position.| Heungkuk Metaltech vs. Daishin Information Communications | Heungkuk Metaltech vs. Lotte Data Communication | Heungkuk Metaltech vs. Mobile Appliance | Heungkuk Metaltech vs. Korea Information Communications |
| LG Chem vs. ECSTELECOM Co | LG Chem vs. Korea Air Svc | LG Chem vs. Ssangyong Information Communication | LG Chem vs. BNK 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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