Correlation Between LG Household and KT Submarine
Can any of the company-specific risk be diversified away by investing in both LG Household and KT Submarine 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 KT Submarine 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 KT Submarine Telecom, you can compare the effects of market volatilities on LG Household and KT Submarine 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 KT Submarine. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and KT Submarine.
Diversification Opportunities for LG Household and KT Submarine
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 051900 and 060370 is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and KT Submarine Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Submarine Telecom 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 KT Submarine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Submarine Telecom has no effect on the direction of LG Household i.e., LG Household and KT Submarine go up and down completely randomly.
Pair Corralation between LG Household and KT Submarine
Assuming the 90 days trading horizon LG Household Healthcare is expected to under-perform the KT Submarine. But the stock apears to be less risky and, when comparing its historical volatility, LG Household Healthcare is 1.58 times less risky than KT Submarine. The stock trades about 0.0 of its potential returns per unit of risk. The KT Submarine Telecom is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,084,000 in KT Submarine Telecom on September 20, 2024 and sell it today you would earn a total of 367,000 from holding KT Submarine Telecom or generate 33.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.39% |
| Values | Daily Returns |
LG Household Healthcare vs. KT Submarine Telecom
Performance |
| Timeline |
| LG Household Healthcare |
| KT Submarine Telecom |
LG Household and KT Submarine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and KT Submarine
The main advantage of trading using opposite LG Household and KT Submarine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, KT Submarine 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 KT Submarine will offset losses from the drop in KT Submarine's long position.| LG Household vs. Hanshin Construction Co | LG Household vs. Tway Air Co | LG Household vs. Air Busan Co | LG Household vs. Woorim Machinery Co |
| KT Submarine vs. LG Household Healthcare | KT Submarine vs. PJ Metal Co | KT Submarine vs. Dgb Financial | KT Submarine vs. Lotte Non Life Insurance |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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