Correlation Between Samji Electronics and LG Household
Can any of the company-specific risk be diversified away by investing in both Samji Electronics and LG Household 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 Samji Electronics and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samji Electronics Co and LG Household Healthcare, you can compare the effects of market volatilities on Samji Electronics and LG Household 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 Samji Electronics with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samji Electronics and LG Household.
Diversification Opportunities for Samji Electronics and LG Household
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Samji and 051905 is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Samji Electronics Co and LG Household Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Household Healthcare and Samji Electronics 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 Samji Electronics Co are associated (or correlated) with LG Household. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Household Healthcare has no effect on the direction of Samji Electronics i.e., Samji Electronics and LG Household go up and down completely randomly.
Pair Corralation between Samji Electronics and LG Household
Assuming the 90 days trading horizon Samji Electronics Co is expected to generate 0.49 times more return on investment than LG Household. However, Samji Electronics Co is 2.04 times less risky than LG Household. It trades about -0.07 of its potential returns per unit of risk. LG Household Healthcare is currently generating about -0.07 per unit of risk. If you would invest 860,000 in Samji Electronics Co on August 28, 2024 and sell it today you would lose (11,000) from holding Samji Electronics Co or give up 1.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samji Electronics Co vs. LG Household Healthcare
Performance |
| Timeline |
| Samji Electronics |
| LG Household Healthcare |
Samji Electronics and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samji Electronics and LG Household
The main advantage of trading using opposite Samji Electronics and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samji Electronics position performs unexpectedly, LG Household 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 Household will offset losses from the drop in LG Household's long position.| Samji Electronics vs. Korea Real Estate | Samji Electronics vs. Korea Ratings Co | Samji Electronics vs. IQuest Co | Samji Electronics vs. Wonbang Tech Co |
| LG Household vs. Jeil Steel Mfg | LG Household vs. Dongbu Steel Co | LG Household vs. Cuckoo Homesys Co | LG Household vs. Daejung Chemicals Metals |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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