Correlation Between Daishin Information and LG Electronics
Can any of the company-specific risk be diversified away by investing in both Daishin Information and LG Electronics 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 Daishin Information and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daishin Information Communications and LG Electronics, you can compare the effects of market volatilities on Daishin Information and LG Electronics 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 Daishin Information with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daishin Information and LG Electronics.
Diversification Opportunities for Daishin Information and LG Electronics
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Daishin and 066570 is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Daishin Information Communicat and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and Daishin Information 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 Daishin Information Communications are associated (or correlated) with LG Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics has no effect on the direction of Daishin Information i.e., Daishin Information and LG Electronics go up and down completely randomly.
Pair Corralation between Daishin Information and LG Electronics
Assuming the 90 days trading horizon Daishin Information Communications is expected to generate 0.7 times more return on investment than LG Electronics. However, Daishin Information Communications is 1.42 times less risky than LG Electronics. It trades about -0.12 of its potential returns per unit of risk. LG Electronics is currently generating about -0.18 per unit of risk. If you would invest 91,400 in Daishin Information Communications on August 27, 2024 and sell it today you would lose (5,600) from holding Daishin Information Communications or give up 6.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daishin Information Communicat vs. LG Electronics
Performance |
| Timeline |
| Daishin Information |
| LG Electronics |
Daishin Information and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daishin Information and LG Electronics
The main advantage of trading using opposite Daishin Information and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daishin Information position performs unexpectedly, LG Electronics 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 LG Electronics will offset losses from the drop in LG Electronics' long position.| Daishin Information vs. SSR Inc | Daishin Information vs. Busan Industrial Co | Daishin Information vs. Busan Ind | Daishin Information vs. Mirae Asset Daewoo |
| LG Electronics vs. AptaBio Therapeutics | LG Electronics vs. Daewoo SBI SPAC | LG Electronics vs. Dream Security co | LG Electronics vs. Microfriend |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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