Correlation Between LG Household and Shinsegae Information
Can any of the company-specific risk be diversified away by investing in both LG Household and Shinsegae 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 Shinsegae 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 Shinsegae Information Communication, you can compare the effects of market volatilities on LG Household and Shinsegae 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 Shinsegae Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Shinsegae Information.
Diversification Opportunities for LG Household and Shinsegae Information
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 051905 and Shinsegae is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Shinsegae Information Communic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Information 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 Shinsegae Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae Information has no effect on the direction of LG Household i.e., LG Household and Shinsegae Information go up and down completely randomly.
Pair Corralation between LG Household and Shinsegae Information
Assuming the 90 days trading horizon LG Household Healthcare is expected to generate 1.15 times more return on investment than Shinsegae Information. However, LG Household is 1.15 times more volatile than Shinsegae Information Communication. It trades about -0.04 of its potential returns per unit of risk. Shinsegae Information Communication is currently generating about -0.28 per unit of risk. If you would invest 14,970,000 in LG Household Healthcare on August 26, 2024 and sell it today you would lose (270,000) from holding LG Household Healthcare or give up 1.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Household Healthcare vs. Shinsegae Information Communic
Performance |
| Timeline |
| LG Household Healthcare |
| Shinsegae Information |
LG Household and Shinsegae Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Shinsegae Information
The main advantage of trading using opposite LG Household and Shinsegae Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Shinsegae 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 Shinsegae Information will offset losses from the drop in Shinsegae Information's long position.| LG Household vs. Nice Information Telecommunication | LG Household vs. Iljin Display | LG Household vs. DB Insurance Co | LG Household vs. ZUM Internet Corp |
| Shinsegae Information vs. AptaBio Therapeutics | Shinsegae Information vs. Daewoo SBI SPAC | Shinsegae Information vs. Dream Security co | Shinsegae Information vs. Microfriend |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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