Correlation Between LG Household and Sajo Ind
Can any of the company-specific risk be diversified away by investing in both LG Household and Sajo Ind 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 Sajo Ind 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 Sajo Ind, you can compare the effects of market volatilities on LG Household and Sajo Ind 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 Sajo Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Sajo Ind.
Diversification Opportunities for LG Household and Sajo Ind
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 051900 and Sajo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Sajo Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sajo Ind 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 Sajo Ind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sajo Ind has no effect on the direction of LG Household i.e., LG Household and Sajo Ind go up and down completely randomly.
Pair Corralation between LG Household and Sajo Ind
Assuming the 90 days trading horizon LG Household Healthcare is expected to generate 1.13 times more return on investment than Sajo Ind. However, LG Household is 1.13 times more volatile than Sajo Ind. It trades about 0.01 of its potential returns per unit of risk. Sajo Ind is currently generating about -0.21 per unit of risk. If you would invest 33,450,000 in LG Household Healthcare on September 13, 2024 and sell it today you would earn a total of 0.00 from holding LG Household Healthcare or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
LG Household Healthcare vs. Sajo Ind
Performance |
| Timeline |
| LG Household Healthcare |
| Sajo Ind |
LG Household and Sajo Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Sajo Ind
The main advantage of trading using opposite LG Household and Sajo Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Sajo Ind 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 Sajo Ind will offset losses from the drop in Sajo Ind's long position.| LG Household vs. Adaptive Plasma Technology | LG Household vs. Sung Bo Chemicals | LG Household vs. Puloon Technology | LG Household vs. Woori Technology |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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