Correlation Between Ssangyong Information and LG Household
Can any of the company-specific risk be diversified away by investing in both Ssangyong Information 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 Ssangyong Information and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ssangyong Information Communication and LG Household Healthcare, you can compare the effects of market volatilities on Ssangyong Information 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 Ssangyong Information with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ssangyong Information and LG Household.
Diversification Opportunities for Ssangyong Information and LG Household
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ssangyong and 051905 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ssangyong Information Communic 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 Ssangyong Information 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 Ssangyong Information Communication 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 Ssangyong Information i.e., Ssangyong Information and LG Household go up and down completely randomly.
Pair Corralation between Ssangyong Information and LG Household
Assuming the 90 days trading horizon Ssangyong Information Communication is expected to under-perform the LG Household. But the stock apears to be less risky and, when comparing its historical volatility, Ssangyong Information Communication is 1.3 times less risky than LG Household. The stock trades about -0.06 of its potential returns per unit of risk. The LG Household Healthcare is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 24,700,000 in LG Household Healthcare on August 24, 2024 and sell it today you would lose (10,000,000) from holding LG Household Healthcare or give up 40.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ssangyong Information Communic vs. LG Household Healthcare
Performance |
| Timeline |
| Ssangyong Information |
| LG Household Healthcare |
Ssangyong Information and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ssangyong Information and LG Household
The main advantage of trading using opposite Ssangyong Information and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ssangyong Information 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.| Ssangyong Information vs. Samlip General Foods | Ssangyong Information vs. Haitai Confectionery Foods | Ssangyong Information vs. Lotte Chilsung Beverage | Ssangyong Information vs. QUALITAS SEMICONDUCTOR LTD |
| LG Household vs. Lotte Data Communication | LG Household vs. Dongil Metal Co | LG Household vs. Daiyang Metal Co | LG Household vs. Ssangyong Information Communication |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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