Correlation Between Daol Investment and LG Chem
Can any of the company-specific risk be diversified away by investing in both Daol Investment and LG Chem 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 Daol Investment and LG Chem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daol Investment Securities and LG Chem, you can compare the effects of market volatilities on Daol Investment and LG Chem 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 Daol Investment with a short position of LG Chem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daol Investment and LG Chem.
Diversification Opportunities for Daol Investment and LG Chem
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daol and 051915 is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Daol Investment Securities and LG Chem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chem and Daol Investment 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 Daol Investment Securities are associated (or correlated) with LG Chem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chem has no effect on the direction of Daol Investment i.e., Daol Investment and LG Chem go up and down completely randomly.
Pair Corralation between Daol Investment and LG Chem
Assuming the 90 days trading horizon Daol Investment Securities is expected to generate 1.17 times more return on investment than LG Chem. However, Daol Investment is 1.17 times more volatile than LG Chem. It trades about 0.03 of its potential returns per unit of risk. LG Chem is currently generating about -0.3 per unit of risk. If you would invest 276,000 in Daol Investment Securities on November 7, 2024 and sell it today you would earn a total of 5,500 from holding Daol Investment Securities or generate 1.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daol Investment Securities vs. LG Chem
Performance |
| Timeline |
| Daol Investment Secu |
| LG Chem |
Daol Investment and LG Chem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daol Investment and LG Chem
The main advantage of trading using opposite Daol Investment and LG Chem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daol Investment position performs unexpectedly, LG Chem 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 Chem will offset losses from the drop in LG Chem's long position.| Daol Investment vs. Seoul Electronics Telecom | Daol Investment vs. Sejong Telecom | Daol Investment vs. Nice Information Telecommunication | Daol Investment vs. DB Financial Investment |
| LG Chem vs. Lotte Chilsung Beverage | LG Chem vs. KEPCO Engineering Construction | LG Chem vs. Hyundai BNG Steel | LG Chem vs. Daechang Steel Co |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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