Correlation Between LG Household and SCI Information
Can any of the company-specific risk be diversified away by investing in both LG Household and SCI Information 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 SCI Information 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 SCI Information Service, you can compare the effects of market volatilities on LG Household and SCI Information 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 SCI Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and SCI Information.
Diversification Opportunities for LG Household and SCI Information
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 051900 and SCI is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and SCI Information Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCI Information Service 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 SCI Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCI Information Service has no effect on the direction of LG Household i.e., LG Household and SCI Information go up and down completely randomly.
Pair Corralation between LG Household and SCI Information
Assuming the 90 days trading horizon LG Household Healthcare is expected to under-perform the SCI Information. But the stock apears to be less risky and, when comparing its historical volatility, LG Household Healthcare is 1.4 times less risky than SCI Information. The stock trades about -0.15 of its potential returns per unit of risk. The SCI Information Service is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 202,500 in SCI Information Service on October 26, 2024 and sell it today you would earn a total of 25,000 from holding SCI Information Service or generate 12.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Household Healthcare vs. SCI Information Service
Performance |
| Timeline |
| LG Household Healthcare |
| SCI Information Service |
LG Household and SCI Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and SCI Information
The main advantage of trading using opposite LG Household and SCI Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, SCI Information 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 SCI Information will offset losses from the drop in SCI Information's long position.| LG Household vs. Nice Information Telecommunication | LG Household vs. Haitai Confectionery Foods | LG Household vs. Moadata Co | LG Household vs. DataSolution |
| SCI Information vs. Samsung Electronics Co | SCI Information vs. Samsung Electronics Co | SCI Information vs. SK Hynix | SCI Information vs. HMM Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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