Correlation Between LG Household and Samsung Biologics
Can any of the company-specific risk be diversified away by investing in both LG Household and Samsung Biologics 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 Samsung Biologics 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 Samsung Biologics Co, you can compare the effects of market volatilities on LG Household and Samsung Biologics 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 Samsung Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Samsung Biologics.
Diversification Opportunities for LG Household and Samsung Biologics
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 051900 and Samsung is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Samsung Biologics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Biologics 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 Samsung Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Biologics has no effect on the direction of LG Household i.e., LG Household and Samsung Biologics go up and down completely randomly.
Pair Corralation between LG Household and Samsung Biologics
Assuming the 90 days trading horizon LG Household Healthcare is expected to under-perform the Samsung Biologics. In addition to that, LG Household is 1.65 times more volatile than Samsung Biologics Co. It trades about -0.04 of its total potential returns per unit of risk. Samsung Biologics Co is currently generating about 0.04 per unit of volatility. If you would invest 79,600,000 in Samsung Biologics Co on November 27, 2024 and sell it today you would earn a total of 20,400,000 from holding Samsung Biologics Co or generate 25.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Household Healthcare vs. Samsung Biologics Co
Performance |
| Timeline |
| LG Household Healthcare |
| Samsung Biologics |
LG Household and Samsung Biologics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Samsung Biologics
The main advantage of trading using opposite LG Household and Samsung Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Samsung Biologics 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 Samsung Biologics will offset losses from the drop in Samsung Biologics' long position.| LG Household vs. SK Telecom Co | LG Household vs. LG Household Healthcare | LG Household vs. Kukil Metal Co | LG Household vs. KT Submarine Telecom |
| Samsung Biologics vs. Korea Air Svc | Samsung Biologics vs. KPX Green Chemical | Samsung Biologics vs. Chorokbaem Healthcare Co | Samsung Biologics vs. Infinitt Healthcare 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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