Correlation Between LG Household and Myoung Shin
Can any of the company-specific risk be diversified away by investing in both LG Household and Myoung Shin 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 Myoung Shin 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 Myoung Shin Industrial, you can compare the effects of market volatilities on LG Household and Myoung Shin 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 Myoung Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Myoung Shin.
Diversification Opportunities for LG Household and Myoung Shin
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 051900 and Myoung is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Myoung Shin Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Myoung Shin Industrial 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 Myoung Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Myoung Shin Industrial has no effect on the direction of LG Household i.e., LG Household and Myoung Shin go up and down completely randomly.
Pair Corralation between LG Household and Myoung Shin
Assuming the 90 days trading horizon LG Household Healthcare is expected to under-perform the Myoung Shin. But the stock apears to be less risky and, when comparing its historical volatility, LG Household Healthcare is 1.32 times less risky than Myoung Shin. The stock trades about -0.28 of its potential returns per unit of risk. The Myoung Shin Industrial is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,112,000 in Myoung Shin Industrial on October 11, 2024 and sell it today you would lose (37,000) from holding Myoung Shin Industrial or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Household Healthcare vs. Myoung Shin Industrial
Performance |
| Timeline |
| LG Household Healthcare |
| Myoung Shin Industrial |
LG Household and Myoung Shin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Myoung Shin
The main advantage of trading using opposite LG Household and Myoung Shin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Myoung Shin 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 Myoung Shin will offset losses from the drop in Myoung Shin's long position.| LG Household vs. Miwon Chemical | LG Household vs. Dongnam Chemical Co | LG Household vs. Pan Entertainment Co | LG Household vs. Digital Multimedia Technology |
| Myoung Shin vs. Shinsegae Food | Myoung Shin vs. Osang Healthcare Co,Ltd | Myoung Shin vs. FoodNamoo | Myoung Shin vs. LG Household Healthcare |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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