Correlation Between LG Household and Hyundai Steel
Can any of the company-specific risk be diversified away by investing in both LG Household and Hyundai Steel 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 Household and Hyundai Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Household Healthcare and Hyundai Steel, you can compare the effects of market volatilities on LG Household and Hyundai Steel 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 Household with a short position of Hyundai Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Hyundai Steel.
Diversification Opportunities for LG Household and Hyundai Steel
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between 051900 and Hyundai is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Hyundai Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Steel and LG Household 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 Household Healthcare are associated (or correlated) with Hyundai Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Steel has no effect on the direction of LG Household i.e., LG Household and Hyundai Steel go up and down completely randomly.
Pair Corralation between LG Household and Hyundai Steel
Assuming the 90 days trading horizon LG Household Healthcare is expected to under-perform the Hyundai Steel. In addition to that, LG Household is 1.18 times more volatile than Hyundai Steel. It trades about -0.06 of its total potential returns per unit of risk. Hyundai Steel is currently generating about -0.02 per unit of volatility. If you would invest 3,261,779 in Hyundai Steel on November 2, 2024 and sell it today you would lose (916,779) from holding Hyundai Steel or give up 28.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Household Healthcare vs. Hyundai Steel
Performance |
| Timeline |
| LG Household Healthcare |
| Hyundai Steel |
LG Household and Hyundai Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Hyundai Steel
The main advantage of trading using opposite LG Household and Hyundai Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Hyundai Steel 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 Hyundai Steel will offset losses from the drop in Hyundai Steel's long position.| LG Household vs. DONGKUK TED METAL | LG Household vs. Daejung Chemicals Metals | LG Household vs. Dongbang Transport Logistics | LG Household vs. Kukil Metal Co |
| Hyundai Steel vs. Lotte Fine Chemical | Hyundai Steel vs. Kg Chemical | Hyundai Steel vs. Tae Kyung Chemical | Hyundai Steel vs. Adaptive Plasma Technology |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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