Correlation Between Clean Science and LG Electronics
Can any of the company-specific risk be diversified away by investing in both Clean Science 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 Clean Science and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Science co and LG Electronics, you can compare the effects of market volatilities on Clean Science 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 Clean Science with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Science and LG Electronics.
Diversification Opportunities for Clean Science and LG Electronics
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Clean and 066570 is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Clean Science co and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and Clean Science 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 Clean Science 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 Clean Science i.e., Clean Science and LG Electronics go up and down completely randomly.
Pair Corralation between Clean Science and LG Electronics
Assuming the 90 days trading horizon Clean Science co is expected to under-perform the LG Electronics. In addition to that, Clean Science is 1.21 times more volatile than LG Electronics. It trades about -0.08 of its total potential returns per unit of risk. LG Electronics is currently generating about -0.04 per unit of volatility. If you would invest 10,263,700 in LG Electronics on September 1, 2024 and sell it today you would lose (1,293,700) from holding LG Electronics or give up 12.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clean Science co vs. LG Electronics
Performance |
| Timeline |
| Clean Science co |
| LG Electronics |
Clean Science and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Science and LG Electronics
The main advantage of trading using opposite Clean Science and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Science 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.| Clean Science vs. Korea New Network | Clean Science vs. ICD Co | Clean Science vs. DYPNF CoLtd | Clean Science vs. Busan Industrial Co |
| LG Electronics vs. Hyundai Green Food | LG Electronics vs. Seoul Food Industrial | LG Electronics vs. Haitai Confectionery Foods | LG Electronics vs. LS Materials |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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