Correlation Between LG Household and Kakaopay Corp
Can any of the company-specific risk be diversified away by investing in both LG Household and Kakaopay Corp 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 Kakaopay Corp 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 kakaopay Corp, you can compare the effects of market volatilities on LG Household and Kakaopay Corp 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 Kakaopay Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Household and Kakaopay Corp.
Diversification Opportunities for LG Household and Kakaopay Corp
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 051905 and Kakaopay is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding LG Household Healthcare and kakaopay Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on kakaopay Corp 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 Kakaopay Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of kakaopay Corp has no effect on the direction of LG Household i.e., LG Household and Kakaopay Corp go up and down completely randomly.
Pair Corralation between LG Household and Kakaopay Corp
Assuming the 90 days trading horizon LG Household Healthcare is expected to under-perform the Kakaopay Corp. But the stock apears to be less risky and, when comparing its historical volatility, LG Household Healthcare is 1.55 times less risky than Kakaopay Corp. The stock trades about -0.12 of its potential returns per unit of risk. The kakaopay Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,455,000 in kakaopay Corp on September 3, 2024 and sell it today you would earn a total of 20,000 from holding kakaopay Corp or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Household Healthcare vs. kakaopay Corp
Performance |
| Timeline |
| LG Household Healthcare |
| kakaopay Corp |
LG Household and Kakaopay Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Household and Kakaopay Corp
The main advantage of trading using opposite LG Household and Kakaopay Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Household position performs unexpectedly, Kakaopay Corp 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 Kakaopay Corp will offset losses from the drop in Kakaopay Corp's long position.| LG Household vs. Total Soft Bank | LG Household vs. Korea Information Communications | LG Household vs. DB Insurance Co | LG Household vs. Mgame Corp |
| Kakaopay Corp vs. PLAYWITH | Kakaopay Corp vs. LG Household Healthcare | Kakaopay Corp vs. Formetal Co | Kakaopay Corp vs. Korean Air Lines |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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