Correlation Between LG Innotek and Korea Air
Can any of the company-specific risk be diversified away by investing in both LG Innotek and Korea Air 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 Korea Air 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 Korea Air Svc, you can compare the effects of market volatilities on LG Innotek and Korea Air 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 Korea Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Innotek and Korea Air.
Diversification Opportunities for LG Innotek and Korea Air
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 011070 and Korea is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding LG Innotek Co and Korea Air Svc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Air Svc 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 Korea Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Air Svc has no effect on the direction of LG Innotek i.e., LG Innotek and Korea Air go up and down completely randomly.
Pair Corralation between LG Innotek and Korea Air
Assuming the 90 days trading horizon LG Innotek Co is expected to generate 1.66 times more return on investment than Korea Air. However, LG Innotek is 1.66 times more volatile than Korea Air Svc. It trades about 0.25 of its potential returns per unit of risk. Korea Air Svc is currently generating about 0.06 per unit of risk. If you would invest 14,870,000 in LG Innotek Co on November 27, 2024 and sell it today you would earn a total of 1,530,000 from holding LG Innotek Co or generate 10.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Innotek Co vs. Korea Air Svc
Performance |
| Timeline |
| LG Innotek |
| Korea Air Svc |
LG Innotek and Korea Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Innotek and Korea Air
The main advantage of trading using opposite LG Innotek and Korea Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Innotek position performs unexpectedly, Korea Air 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 Korea Air will offset losses from the drop in Korea Air's long position.| LG Innotek vs. Samick Musical Instruments | LG Innotek vs. AeroSpace Technology of | LG Innotek vs. BGF Retail Co | LG Innotek vs. Genie Music |
| Korea Air vs. Daishin Information Communications | Korea Air vs. FOODWELL Co | Korea Air vs. BIT Computer Co | Korea Air vs. Haitai Confectionery Foods |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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