Correlation Between LG Innotek and Nature
Can any of the company-specific risk be diversified away by investing in both LG Innotek and Nature 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 Nature 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 Nature and Environment, you can compare the effects of market volatilities on LG Innotek and Nature 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 Nature. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Innotek and Nature.
Diversification Opportunities for LG Innotek and Nature
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 011070 and Nature is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding LG Innotek Co and Nature and Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nature and Environment 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 Nature. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nature and Environment has no effect on the direction of LG Innotek i.e., LG Innotek and Nature go up and down completely randomly.
Pair Corralation between LG Innotek and Nature
Assuming the 90 days trading horizon LG Innotek Co is expected to under-perform the Nature. But the stock apears to be less risky and, when comparing its historical volatility, LG Innotek Co is 1.44 times less risky than Nature. The stock trades about -0.22 of its potential returns per unit of risk. The Nature and Environment is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 59,800 in Nature and Environment on September 1, 2024 and sell it today you would earn a total of 1,200 from holding Nature and Environment or generate 2.01% 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. Nature and Environment
Performance |
| Timeline |
| LG Innotek |
| Nature and Environment |
LG Innotek and Nature Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Innotek and Nature
The main advantage of trading using opposite LG Innotek and Nature positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Innotek position performs unexpectedly, Nature 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 Nature will offset losses from the drop in Nature'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 |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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