Correlation Between LG Uplus and Posco Chemical
Can any of the company-specific risk be diversified away by investing in both LG Uplus and Posco Chemical 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 Uplus and Posco Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Uplus and Posco Chemical Co, you can compare the effects of market volatilities on LG Uplus and Posco Chemical 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 Uplus with a short position of Posco Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Uplus and Posco Chemical.
Diversification Opportunities for LG Uplus and Posco Chemical
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 032640 and Posco is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding LG Uplus and Posco Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Posco Chemical and LG Uplus 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 Uplus are associated (or correlated) with Posco Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Posco Chemical has no effect on the direction of LG Uplus i.e., LG Uplus and Posco Chemical go up and down completely randomly.
Pair Corralation between LG Uplus and Posco Chemical
Assuming the 90 days trading horizon LG Uplus is expected to generate 0.27 times more return on investment than Posco Chemical. However, LG Uplus is 3.66 times less risky than Posco Chemical. It trades about 0.05 of its potential returns per unit of risk. Posco Chemical Co is currently generating about -0.08 per unit of risk. If you would invest 969,226 in LG Uplus on September 12, 2024 and sell it today you would earn a total of 108,774 from holding LG Uplus or generate 11.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.58% |
| Values | Daily Returns |
LG Uplus vs. Posco Chemical Co
Performance |
| Timeline |
| LG Uplus |
| Posco Chemical |
LG Uplus and Posco Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Uplus and Posco Chemical
The main advantage of trading using opposite LG Uplus and Posco Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Uplus position performs unexpectedly, Posco Chemical 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 Posco Chemical will offset losses from the drop in Posco Chemical's long position.| LG Uplus vs. Kbi Metal Co | LG Uplus vs. Pungguk Ethanol Industrial | LG Uplus vs. DONGKUK TED METAL | LG Uplus vs. Hanjin Transportation Co |
| Posco Chemical vs. Kukdong Oil Chemicals | Posco Chemical vs. BGF Retail Co | Posco Chemical vs. Dongnam Chemical Co | Posco Chemical vs. Namhae Chemical |
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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