Correlation Between LG Innotek and Woorim Machinery
Can any of the company-specific risk be diversified away by investing in both LG Innotek and Woorim Machinery 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 Woorim Machinery 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 Woorim Machinery Co, you can compare the effects of market volatilities on LG Innotek and Woorim Machinery 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 Woorim Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Innotek and Woorim Machinery.
Diversification Opportunities for LG Innotek and Woorim Machinery
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between 011070 and Woorim is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding LG Innotek Co and Woorim Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woorim Machinery 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 Woorim Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woorim Machinery has no effect on the direction of LG Innotek i.e., LG Innotek and Woorim Machinery go up and down completely randomly.
Pair Corralation between LG Innotek and Woorim Machinery
Assuming the 90 days trading horizon LG Innotek Co is expected to generate 0.8 times more return on investment than Woorim Machinery. However, LG Innotek Co is 1.25 times less risky than Woorim Machinery. It trades about 0.25 of its potential returns per unit of risk. Woorim Machinery Co 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Innotek Co vs. Woorim Machinery Co
Performance |
| Timeline |
| LG Innotek |
| Woorim Machinery |
LG Innotek and Woorim Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Innotek and Woorim Machinery
The main advantage of trading using opposite LG Innotek and Woorim Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Innotek position performs unexpectedly, Woorim Machinery 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 Woorim Machinery will offset losses from the drop in Woorim Machinery'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 |
| Woorim Machinery vs. LG Household Healthcare | Woorim Machinery vs. Sewoon Medical Co | Woorim Machinery vs. DB Financial Investment | Woorim Machinery vs. Green Cross Medical |
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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