Correlation Between InfoBank and LG Electronics
Can any of the company-specific risk be diversified away by investing in both InfoBank 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 InfoBank and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InfoBank and LG Electronics, you can compare the effects of market volatilities on InfoBank 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 InfoBank with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of InfoBank and LG Electronics.
Diversification Opportunities for InfoBank and LG Electronics
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between InfoBank and 066570 is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding InfoBank and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and InfoBank 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 InfoBank 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 InfoBank i.e., InfoBank and LG Electronics go up and down completely randomly.
Pair Corralation between InfoBank and LG Electronics
Assuming the 90 days trading horizon InfoBank is expected to under-perform the LG Electronics. In addition to that, InfoBank is 1.64 times more volatile than LG Electronics. It trades about -0.03 of its total potential returns per unit of risk. LG Electronics is currently generating about -0.03 per unit of volatility. If you would invest 11,258,000 in LG Electronics on November 7, 2024 and sell it today you would lose (3,418,000) from holding LG Electronics or give up 30.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InfoBank vs. LG Electronics
Performance |
| Timeline |
| InfoBank |
| LG Electronics |
InfoBank and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InfoBank and LG Electronics
The main advantage of trading using opposite InfoBank and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InfoBank 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.| InfoBank vs. Samsung Electronics Co | InfoBank vs. Samsung Electronics Co | InfoBank vs. Hyundai Motor Co | InfoBank vs. Hyundai Motor |
| LG Electronics vs. Samsung Publishing Co | LG Electronics vs. Samyang Foods Co | LG Electronics vs. CJ Seafood Corp | LG Electronics vs. Lotte Non Life Insurance |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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