Correlation Between LG Innotek and Korea Aerospace
Can any of the company-specific risk be diversified away by investing in both LG Innotek and Korea Aerospace 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 Aerospace 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 Aerospace Industries, you can compare the effects of market volatilities on LG Innotek and Korea Aerospace 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 Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Innotek and Korea Aerospace.
Diversification Opportunities for LG Innotek and Korea Aerospace
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 011070 and Korea is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding LG Innotek Co and Korea Aerospace Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Aerospace Indu 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 Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Aerospace Indu has no effect on the direction of LG Innotek i.e., LG Innotek and Korea Aerospace go up and down completely randomly.
Pair Corralation between LG Innotek and Korea Aerospace
Assuming the 90 days trading horizon LG Innotek Co is expected to under-perform the Korea Aerospace. In addition to that, LG Innotek is 1.25 times more volatile than Korea Aerospace Industries. It trades about -0.04 of its total potential returns per unit of risk. Korea Aerospace Industries is currently generating about 0.04 per unit of volatility. If you would invest 4,855,051 in Korea Aerospace Industries on September 1, 2024 and sell it today you would earn a total of 984,949 from holding Korea Aerospace Industries or generate 20.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.62% |
| Values | Daily Returns |
LG Innotek Co vs. Korea Aerospace Industries
Performance |
| Timeline |
| LG Innotek |
| Korea Aerospace Indu |
LG Innotek and Korea Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Innotek and Korea Aerospace
The main advantage of trading using opposite LG Innotek and Korea Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Innotek position performs unexpectedly, Korea Aerospace 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 Aerospace will offset losses from the drop in Korea Aerospace'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 |
| Korea Aerospace vs. Bookook Steel | Korea Aerospace vs. Cube Entertainment | Korea Aerospace vs. Kaonmedia Co | Korea Aerospace vs. Jeil Steel Mfg |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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