Correlation Between LG Household and Vissem Electronics
Can any of the company-specific risk be diversified away by investing in both LG Household and Vissem Electronics 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 Vissem Electronics 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 Vissem Electronics Co, you can compare the effects of market volatilities on LG Household and Vissem Electronics 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 Vissem Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Vissem Electronics.
Diversification Opportunities for LG Household and Vissem Electronics
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 051905 and Vissem is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and Vissem Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vissem Electronics 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 Vissem Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vissem Electronics has no effect on the direction of LG Household i.e., LG Household and Vissem Electronics go up and down completely randomly.
Pair Corralation between LG Household and Vissem Electronics
Assuming the 90 days trading horizon LG Household Healthcare is expected to under-perform the Vissem Electronics. In addition to that, LG Household is 1.15 times more volatile than Vissem Electronics Co. It trades about -0.27 of its total potential returns per unit of risk. Vissem Electronics Co is currently generating about -0.07 per unit of volatility. If you would invest 366,500 in Vissem Electronics Co on November 7, 2024 and sell it today you would lose (4,500) from holding Vissem Electronics Co or give up 1.23% 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. Vissem Electronics Co
Performance |
| Timeline |
| LG Household Healthcare |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Vissem Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
LG Household and Vissem Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Vissem Electronics
The main advantage of trading using opposite LG Household and Vissem Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Vissem Electronics 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 Vissem Electronics will offset losses from the drop in Vissem Electronics' long position.| LG Household vs. MediaZen | LG Household vs. Spolytech Co | LG Household vs. Yura Tech Co | LG Household vs. Ewon Comfortech Co |
| Vissem Electronics vs. Puloon Technology | Vissem Electronics vs. LAKE MATERIALS LTD | Vissem Electronics vs. Polaris Office Corp | Vissem Electronics vs. Seoul Electronics Telecom |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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