Correlation Between LG Innotek and KG Eco
Can any of the company-specific risk be diversified away by investing in both LG Innotek and KG Eco 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 KG Eco 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 KG Eco Technology, you can compare the effects of market volatilities on LG Innotek and KG Eco 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 KG Eco. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Innotek and KG Eco.
Diversification Opportunities for LG Innotek and KG Eco
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 011070 and 151860 is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding LG Innotek Co and KG Eco Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KG Eco Technology 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 KG Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KG Eco Technology has no effect on the direction of LG Innotek i.e., LG Innotek and KG Eco go up and down completely randomly.
Pair Corralation between LG Innotek and KG Eco
Assuming the 90 days trading horizon LG Innotek Co is expected to under-perform the KG Eco. In addition to that, LG Innotek is 1.19 times more volatile than KG Eco Technology. It trades about -0.11 of its total potential returns per unit of risk. KG Eco Technology is currently generating about 0.15 per unit of volatility. If you would invest 473,000 in KG Eco Technology on November 2, 2024 and sell it today you would earn a total of 27,000 from holding KG Eco Technology or generate 5.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Innotek Co vs. KG Eco Technology
Performance |
| Timeline |
| LG Innotek |
| KG Eco Technology |
LG Innotek and KG Eco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Innotek and KG Eco
The main advantage of trading using opposite LG Innotek and KG Eco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Innotek position performs unexpectedly, KG Eco 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 KG Eco will offset losses from the drop in KG Eco's long position.| LG Innotek vs. Samsung Electronics Co | LG Innotek vs. Samsung Electronics Co | LG Innotek vs. SK Hynix | LG Innotek vs. HMM Co |
| KG Eco vs. Samsung Life Insurance | KG Eco vs. Koryo Credit Information | KG Eco vs. Heungkuk Metaltech CoLtd | KG Eco vs. DB Financial Investment |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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