Correlation Between LG Innotek and Aprogen KIC
Can any of the company-specific risk be diversified away by investing in both LG Innotek and Aprogen KIC 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 Aprogen KIC 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 Aprogen KIC, you can compare the effects of market volatilities on LG Innotek and Aprogen KIC 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 Aprogen KIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Innotek and Aprogen KIC.
Diversification Opportunities for LG Innotek and Aprogen KIC
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 011070 and Aprogen is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding LG Innotek Co and Aprogen KIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aprogen KIC 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 Aprogen KIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aprogen KIC has no effect on the direction of LG Innotek i.e., LG Innotek and Aprogen KIC go up and down completely randomly.
Pair Corralation between LG Innotek and Aprogen KIC
Assuming the 90 days trading horizon LG Innotek Co is expected to under-perform the Aprogen KIC. But the stock apears to be less risky and, when comparing its historical volatility, LG Innotek Co is 1.99 times less risky than Aprogen KIC. The stock trades about -0.04 of its potential returns per unit of risk. The Aprogen KIC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 111,500 in Aprogen KIC on August 29, 2024 and sell it today you would earn a total of 8,900 from holding Aprogen KIC or generate 7.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Innotek Co vs. Aprogen KIC
Performance |
| Timeline |
| LG Innotek |
| Aprogen KIC |
LG Innotek and Aprogen KIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Innotek and Aprogen KIC
The main advantage of trading using opposite LG Innotek and Aprogen KIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Innotek position performs unexpectedly, Aprogen KIC 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 Aprogen KIC will offset losses from the drop in Aprogen KIC's long position.| LG Innotek vs. CG Hi Tech | LG Innotek vs. Nice Information Telecommunication | LG Innotek vs. ZUM Internet Corp | LG Innotek vs. Korean Drug Co |
| Aprogen KIC vs. Hana Materials | Aprogen KIC vs. Miwon Chemical | Aprogen KIC vs. Top Material Co | Aprogen KIC vs. Kukdo Chemical Co |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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