Correlation Between LG Household and Seoul Semiconductor
Can any of the company-specific risk be diversified away by investing in both LG Household and Seoul Semiconductor 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 Seoul Semiconductor 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 Seoul Semiconductor Co, you can compare the effects of market volatilities on LG Household and Seoul Semiconductor 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 Seoul Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Seoul Semiconductor.
Diversification Opportunities for LG Household and Seoul Semiconductor
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 051905 and Seoul is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Seoul Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Semiconductor 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 Seoul Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Semiconductor has no effect on the direction of LG Household i.e., LG Household and Seoul Semiconductor go up and down completely randomly.
Pair Corralation between LG Household and Seoul Semiconductor
Assuming the 90 days trading horizon LG Household Healthcare is expected to generate 0.74 times more return on investment than Seoul Semiconductor. However, LG Household Healthcare is 1.36 times less risky than Seoul Semiconductor. It trades about -0.07 of its potential returns per unit of risk. Seoul Semiconductor Co is currently generating about -0.44 per unit of risk. If you would invest 15,020,000 in LG Household Healthcare on August 28, 2024 and sell it today you would lose (430,000) from holding LG Household Healthcare or give up 2.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Household Healthcare vs. Seoul Semiconductor Co
Performance |
| Timeline |
| LG Household Healthcare |
| Seoul Semiconductor |
LG Household and Seoul Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Seoul Semiconductor
The main advantage of trading using opposite LG Household and Seoul Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Seoul Semiconductor 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 Seoul Semiconductor will offset losses from the drop in Seoul Semiconductor's long position.| LG Household vs. Jeil Steel Mfg | LG Household vs. Dongbu Steel Co | LG Household vs. Cuckoo Homesys Co | LG Household vs. Daejung Chemicals Metals |
| Seoul Semiconductor vs. Korea Real Estate | Seoul Semiconductor vs. Korea Ratings Co | Seoul Semiconductor vs. IQuest Co | Seoul Semiconductor vs. Wonbang Tech 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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