Correlation Between Nice Information and LG Innotek
Can any of the company-specific risk be diversified away by investing in both Nice Information and LG Innotek 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 Nice Information and LG Innotek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nice Information Telecommunication and LG Innotek Co, you can compare the effects of market volatilities on Nice Information and LG Innotek 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 Nice Information with a short position of LG Innotek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nice Information and LG Innotek.
Diversification Opportunities for Nice Information and LG Innotek
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nice and 011070 is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Nice Information Telecommunica and LG Innotek Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Innotek and Nice 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 Nice Information Telecommunication are associated (or correlated) with LG Innotek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Innotek has no effect on the direction of Nice Information i.e., Nice Information and LG Innotek go up and down completely randomly.
Pair Corralation between Nice Information and LG Innotek
Assuming the 90 days trading horizon Nice Information Telecommunication is expected to generate 0.5 times more return on investment than LG Innotek. However, Nice Information Telecommunication is 2.0 times less risky than LG Innotek. It trades about -0.03 of its potential returns per unit of risk. LG Innotek Co is currently generating about -0.04 per unit of risk. If you would invest 2,104,548 in Nice Information Telecommunication on September 1, 2024 and sell it today you would lose (263,548) from holding Nice Information Telecommunication or give up 12.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nice Information Telecommunica vs. LG Innotek Co
Performance |
| Timeline |
| Nice Information Tel |
| LG Innotek |
Nice Information and LG Innotek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nice Information and LG Innotek
The main advantage of trading using opposite Nice Information and LG Innotek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nice Information position performs unexpectedly, LG Innotek 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 Innotek will offset losses from the drop in LG Innotek's long position.| Nice Information vs. Dongsin Engineering Construction | Nice Information vs. Doosan Fuel Cell | Nice Information vs. Daishin Balance 1 | Nice Information vs. Total Soft Bank |
| LG Innotek vs. DONGKUK TED METAL | LG Innotek vs. Hanjoo Light Metal | LG Innotek vs. Daedong Metals Co | LG Innotek vs. JYP Entertainment Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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