Correlation Between LG Innotek and Doosan
Can any of the company-specific risk be diversified away by investing in both LG Innotek and Doosan 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 LG Innotek and Doosan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Innotek Co and Doosan, you can compare the effects of market volatilities on LG Innotek and Doosan 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 LG Innotek with a short position of Doosan. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Innotek and Doosan.
Diversification Opportunities for LG Innotek and Doosan
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 011070 and Doosan is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding LG Innotek Co and Doosan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan and LG Innotek 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 LG Innotek Co are associated (or correlated) with Doosan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doosan has no effect on the direction of LG Innotek i.e., LG Innotek and Doosan go up and down completely randomly.
Pair Corralation between LG Innotek and Doosan
Assuming the 90 days trading horizon LG Innotek Co is expected to under-perform the Doosan. But the stock apears to be less risky and, when comparing its historical volatility, LG Innotek Co is 2.48 times less risky than Doosan. The stock trades about -0.22 of its potential returns per unit of risk. The Doosan is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 20,050,000 in Doosan on September 1, 2024 and sell it today you would lose (390,000) from holding Doosan or give up 1.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
LG Innotek Co vs. Doosan
Performance |
| Timeline |
| LG Innotek |
| Doosan |
LG Innotek and Doosan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Innotek and Doosan
The main advantage of trading using opposite LG Innotek and Doosan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Innotek position performs unexpectedly, Doosan 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 Doosan will offset losses from the drop in Doosan's long position.| LG Innotek vs. DONGKUK TED METAL | LG Innotek vs. Hanjoo Light Metal | LG Innotek vs. Daedong Metals Co | LG Innotek vs. JYP Entertainment Corp |
| Doosan vs. Shinsegae Engineering Construction | Doosan vs. Nam Hwa Construction | Doosan vs. Seoul Broadcasting System | Doosan vs. Dongbang Transport Logistics |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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