Correlation Between LG Household and Kyung In
Can any of the company-specific risk be diversified away by investing in both LG Household and Kyung In 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 Kyung In 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 Kyung In Synthetic Corp, you can compare the effects of market volatilities on LG Household and Kyung In 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 Kyung In. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Kyung In.
Diversification Opportunities for LG Household and Kyung In
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 051900 and Kyung is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Kyung In Synthetic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyung In Synthetic 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 Kyung In. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyung In Synthetic has no effect on the direction of LG Household i.e., LG Household and Kyung In go up and down completely randomly.
Pair Corralation between LG Household and Kyung In
Assuming the 90 days trading horizon LG Household Healthcare is expected to generate 1.39 times more return on investment than Kyung In. However, LG Household is 1.39 times more volatile than Kyung In Synthetic Corp. It trades about -0.01 of its potential returns per unit of risk. Kyung In Synthetic Corp is currently generating about -0.09 per unit of risk. If you would invest 31,100,000 in LG Household Healthcare on November 8, 2024 and sell it today you would lose (200,000) from holding LG Household Healthcare or give up 0.64% 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. Kyung In Synthetic Corp
Performance |
| Timeline |
| LG Household Healthcare |
| Kyung In Synthetic |
LG Household and Kyung In Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Kyung In
The main advantage of trading using opposite LG Household and Kyung In positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Kyung In 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 Kyung In will offset losses from the drop in Kyung In's long position.| LG Household vs. SK Chemicals Co | LG Household vs. Daehan Steel | LG Household vs. Wonil Special Steel | LG Household vs. Hironic Co |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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