Correlation Between LG Household and Tae Kyung
Can any of the company-specific risk be diversified away by investing in both LG Household and Tae Kyung 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 Tae Kyung 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 Tae Kyung Chemical, you can compare the effects of market volatilities on LG Household and Tae Kyung 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 Tae Kyung. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Tae Kyung.
Diversification Opportunities for LG Household and Tae Kyung
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between 051900 and Tae is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Tae Kyung Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tae Kyung Chemical 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 Tae Kyung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tae Kyung Chemical has no effect on the direction of LG Household i.e., LG Household and Tae Kyung go up and down completely randomly.
Pair Corralation between LG Household and Tae Kyung
Assuming the 90 days trading horizon LG Household Healthcare is expected to under-perform the Tae Kyung. In addition to that, LG Household is 1.29 times more volatile than Tae Kyung Chemical. It trades about -0.04 of its total potential returns per unit of risk. Tae Kyung Chemical is currently generating about -0.01 per unit of volatility. If you would invest 1,303,515 in Tae Kyung Chemical on August 31, 2024 and sell it today you would lose (215,515) from holding Tae Kyung Chemical or give up 16.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Household Healthcare vs. Tae Kyung Chemical
Performance |
| Timeline |
| LG Household Healthcare |
| Tae Kyung Chemical |
LG Household and Tae Kyung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Tae Kyung
The main advantage of trading using opposite LG Household and Tae Kyung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Tae Kyung 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 Tae Kyung will offset losses from the drop in Tae Kyung's long position.| LG Household vs. Korea Real Estate | LG Household vs. Korea Ratings Co | LG Household vs. IQuest Co | LG Household vs. Wonbang Tech Co |
| Tae Kyung vs. Semyung Electric Machinery | Tae Kyung vs. Dongwoo Farm To | Tae Kyung vs. Hanshin Construction Co | Tae Kyung vs. Daedong Metals Co |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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