Correlation Between TJ Media and LG Electronics
Can any of the company-specific risk be diversified away by investing in both TJ Media 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 TJ Media and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TJ media Co and LG Electronics, you can compare the effects of market volatilities on TJ Media 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 TJ Media with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of TJ Media and LG Electronics.
Diversification Opportunities for TJ Media and LG Electronics
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 032540 and 066570 is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding TJ media Co and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and TJ Media 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 TJ media Co 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 TJ Media i.e., TJ Media and LG Electronics go up and down completely randomly.
Pair Corralation between TJ Media and LG Electronics
Assuming the 90 days trading horizon TJ media Co is expected to under-perform the LG Electronics. But the stock apears to be less risky and, when comparing its historical volatility, TJ media Co is 1.56 times less risky than LG Electronics. The stock trades about -0.04 of its potential returns per unit of risk. The LG Electronics is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 9,845,610 in LG Electronics on November 3, 2024 and sell it today you would lose (1,425,610) from holding LG Electronics or give up 14.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.58% |
| Values | Daily Returns |
TJ media Co vs. LG Electronics
Performance |
| Timeline |
| TJ media |
| LG Electronics |
TJ Media and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TJ Media and LG Electronics
The main advantage of trading using opposite TJ Media and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TJ Media 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.| TJ Media vs. Daishin Information Communications | TJ Media vs. Woori Technology Investment | TJ Media vs. Daol Investment Securities | TJ Media vs. SBI Investment KOREA |
| LG Electronics vs. Daejung Chemicals Metals | LG Electronics vs. Kukil Metal Co | LG Electronics vs. Nable Communications | LG Electronics vs. Digital Power Communications |
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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