Correlation Between LG Innotek and Tway Air
Can any of the company-specific risk be diversified away by investing in both LG Innotek and Tway 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 Tway 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 Tway Air Co, you can compare the effects of market volatilities on LG Innotek and Tway 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 Tway Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Innotek and Tway Air.
Diversification Opportunities for LG Innotek and Tway Air
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 011070 and Tway is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding LG Innotek Co and Tway Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tway Air 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 Tway Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tway Air has no effect on the direction of LG Innotek i.e., LG Innotek and Tway Air go up and down completely randomly.
Pair Corralation between LG Innotek and Tway Air
Assuming the 90 days trading horizon LG Innotek Co is expected to generate 0.89 times more return on investment than Tway Air. However, LG Innotek Co is 1.13 times less risky than Tway Air. It trades about -0.17 of its potential returns per unit of risk. Tway Air Co is currently generating about -0.16 per unit of risk. If you would invest 17,400,000 in LG Innotek Co on September 2, 2024 and sell it today you would lose (1,210,000) from holding LG Innotek Co or give up 6.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Innotek Co vs. Tway Air Co
Performance |
| Timeline |
| LG Innotek |
| Tway Air |
LG Innotek and Tway Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Innotek and Tway Air
The main advantage of trading using opposite LG Innotek and Tway Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Innotek position performs unexpectedly, Tway 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 Tway Air will offset losses from the drop in Tway Air's long position.| LG Innotek vs. Dongsin Engineering Construction | LG Innotek vs. Doosan Fuel Cell | LG Innotek vs. Daishin Balance 1 | LG Innotek vs. Total Soft Bank |
| Tway Air vs. Nice Information Telecommunication | Tway Air vs. Sejong Industrial | Tway Air vs. Songwon Industrial Co | Tway Air vs. Samick Musical Instruments |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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