Correlation Between Daesung Private and LG Uplus

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Can any of the company-specific risk be diversified away by investing in both Daesung Private and LG Uplus 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 Daesung Private and LG Uplus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daesung Private Equity and LG Uplus, you can compare the effects of market volatilities on Daesung Private and LG Uplus 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 Daesung Private with a short position of LG Uplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daesung Private and LG Uplus.

Diversification Opportunities for Daesung Private and LG Uplus

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between Daesung and 032640 is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Private Equity and LG Uplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Uplus and Daesung Private 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 Daesung Private Equity are associated (or correlated) with LG Uplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Uplus has no effect on the direction of Daesung Private i.e., Daesung Private and LG Uplus go up and down completely randomly.

Pair Corralation between Daesung Private and LG Uplus

Assuming the 90 days trading horizon Daesung Private Equity is expected to generate 2.49 times more return on investment than LG Uplus. However, Daesung Private is 2.49 times more volatile than LG Uplus. It trades about 0.15 of its potential returns per unit of risk. LG Uplus is currently generating about -0.27 per unit of risk. If you would invest  183,400  in Daesung Private Equity on October 21, 2024 and sell it today you would earn a total of  12,700  from holding Daesung Private Equity or generate 6.92% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Daesung Private Equity  vs.  LG Uplus

 Performance 
       Timeline  
Daesung Private Equity 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Daesung Private Equity are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daesung Private sustained solid returns over the last few months and may actually be approaching a breakup point.
LG Uplus 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in LG Uplus are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, LG Uplus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Daesung Private and LG Uplus Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Daesung Private and LG Uplus

The main advantage of trading using opposite Daesung Private and LG Uplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daesung Private position performs unexpectedly, LG Uplus 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 Uplus will offset losses from the drop in LG Uplus' long position.
The idea behind Daesung Private Equity and LG Uplus pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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