Correlation Between LG Household and DAEYANG ELECTRICCoLtd
Can any of the company-specific risk be diversified away by investing in both LG Household and DAEYANG ELECTRICCoLtd 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 DAEYANG ELECTRICCoLtd 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 DAEYANG ELECTRICCoLtd, you can compare the effects of market volatilities on LG Household and DAEYANG ELECTRICCoLtd 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 DAEYANG ELECTRICCoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and DAEYANG ELECTRICCoLtd.
Diversification Opportunities for LG Household and DAEYANG ELECTRICCoLtd
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 051900 and DAEYANG is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and DAEYANG ELECTRICCoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAEYANG ELECTRICCoLtd 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 DAEYANG ELECTRICCoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAEYANG ELECTRICCoLtd has no effect on the direction of LG Household i.e., LG Household and DAEYANG ELECTRICCoLtd go up and down completely randomly.
Pair Corralation between LG Household and DAEYANG ELECTRICCoLtd
Assuming the 90 days trading horizon LG Household Healthcare is expected to under-perform the DAEYANG ELECTRICCoLtd. In addition to that, LG Household is 1.18 times more volatile than DAEYANG ELECTRICCoLtd. It trades about -0.05 of its total potential returns per unit of risk. DAEYANG ELECTRICCoLtd is currently generating about 0.03 per unit of volatility. If you would invest 1,127,000 in DAEYANG ELECTRICCoLtd on August 30, 2024 and sell it today you would earn a total of 188,000 from holding DAEYANG ELECTRICCoLtd or generate 16.68% 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. DAEYANG ELECTRICCoLtd
Performance |
| Timeline |
| LG Household Healthcare |
| DAEYANG ELECTRICCoLtd |
LG Household and DAEYANG ELECTRICCoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and DAEYANG ELECTRICCoLtd
The main advantage of trading using opposite LG Household and DAEYANG ELECTRICCoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, DAEYANG ELECTRICCoLtd 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 DAEYANG ELECTRICCoLtd will offset losses from the drop in DAEYANG ELECTRICCoLtd's long position.| LG Household vs. Samsung Electronics Co | LG Household vs. Samsung Electronics Co | LG Household vs. Hyundai Motor Co | LG Household vs. Hyundai Motor |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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