Correlation Between LG Household and Semyung Electric
Can any of the company-specific risk be diversified away by investing in both LG Household and Semyung Electric 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 Semyung Electric 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 Semyung Electric Machinery, you can compare the effects of market volatilities on LG Household and Semyung Electric 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 Semyung Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Semyung Electric.
Diversification Opportunities for LG Household and Semyung Electric
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 051900 and Semyung is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Semyung Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semyung Electric Mac 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 Semyung Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semyung Electric Mac has no effect on the direction of LG Household i.e., LG Household and Semyung Electric go up and down completely randomly.
Pair Corralation between LG Household and Semyung Electric
Assuming the 90 days trading horizon LG Household Healthcare is expected to generate 0.88 times more return on investment than Semyung Electric. However, LG Household Healthcare is 1.13 times less risky than Semyung Electric. It trades about -0.11 of its potential returns per unit of risk. Semyung Electric Machinery is currently generating about -0.1 per unit of risk. If you would invest 35,150,000 in LG Household Healthcare on August 27, 2024 and sell it today you would lose (2,550,000) from holding LG Household Healthcare or give up 7.25% 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. Semyung Electric Machinery
Performance |
| Timeline |
| LG Household Healthcare |
| Semyung Electric Mac |
LG Household and Semyung Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Semyung Electric
The main advantage of trading using opposite LG Household and Semyung Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Semyung Electric 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 Semyung Electric will offset losses from the drop in Semyung Electric's long position.| LG Household vs. AptaBio Therapeutics | LG Household vs. Daewoo SBI SPAC | LG Household vs. Dream Security co | LG Household vs. Microfriend |
| Semyung Electric vs. Korea Information Communications | Semyung Electric vs. Display Tech Co | Semyung Electric vs. ZUM Internet Corp | Semyung Electric vs. Nable Communications |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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