Correlation Between LG Household and Samil CoLtd
Can any of the company-specific risk be diversified away by investing in both LG Household and Samil CoLtd 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 Samil CoLtd 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 Samil CoLtd, you can compare the effects of market volatilities on LG Household and Samil CoLtd 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 Samil CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Samil CoLtd.
Diversification Opportunities for LG Household and Samil CoLtd
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between 051900 and Samil is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Samil CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samil CoLtd 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 Samil CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samil CoLtd has no effect on the direction of LG Household i.e., LG Household and Samil CoLtd go up and down completely randomly.
Pair Corralation between LG Household and Samil CoLtd
Assuming the 90 days trading horizon LG Household Healthcare is expected to under-perform the Samil CoLtd. In addition to that, LG Household is 1.34 times more volatile than Samil CoLtd. It trades about -0.07 of its total potential returns per unit of risk. Samil CoLtd is currently generating about -0.05 per unit of volatility. If you would invest 180,500 in Samil CoLtd on September 5, 2024 and sell it today you would lose (20,400) from holding Samil CoLtd or give up 11.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.18% |
| Values | Daily Returns |
LG Household Healthcare vs. Samil CoLtd
Performance |
| Timeline |
| LG Household Healthcare |
| Samil CoLtd |
LG Household and Samil CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Samil CoLtd
The main advantage of trading using opposite LG Household and Samil CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Samil CoLtd 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 Samil CoLtd will offset losses from the drop in Samil CoLtd's long position.| LG Household vs. LG Display | LG Household vs. Hyundai Motor | LG Household vs. Hyundai Motor Co | LG Household vs. Hyundai Motor Co |
| Samil CoLtd vs. Nice Information Telecommunication | Samil CoLtd vs. LG Household Healthcare | Samil CoLtd vs. Visang Education | Samil CoLtd vs. Lotte Chilsung Beverage |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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