Correlation Between LG Chemicals and Mirae Asset
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and Mirae Asset 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 Chemicals and Mirae Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and Mirae Asset Daewoo, you can compare the effects of market volatilities on LG Chemicals and Mirae Asset 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 Chemicals with a short position of Mirae Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and Mirae Asset.
Diversification Opportunities for LG Chemicals and Mirae Asset
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 051910 and Mirae is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and Mirae Asset Daewoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirae Asset Daewoo and LG Chemicals 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 Chemicals are associated (or correlated) with Mirae Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirae Asset Daewoo has no effect on the direction of LG Chemicals i.e., LG Chemicals and Mirae Asset go up and down completely randomly.
Pair Corralation between LG Chemicals and Mirae Asset
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the Mirae Asset. In addition to that, LG Chemicals is 1.57 times more volatile than Mirae Asset Daewoo. It trades about -0.16 of its total potential returns per unit of risk. Mirae Asset Daewoo is currently generating about -0.02 per unit of volatility. If you would invest 402,500 in Mirae Asset Daewoo on August 29, 2024 and sell it today you would lose (4,500) from holding Mirae Asset Daewoo or give up 1.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Chemicals vs. Mirae Asset Daewoo
Performance |
| Timeline |
| LG Chemicals |
| Mirae Asset Daewoo |
LG Chemicals and Mirae Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and Mirae Asset
The main advantage of trading using opposite LG Chemicals and Mirae Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, Mirae Asset 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 Mirae Asset will offset losses from the drop in Mirae Asset's long position.| LG Chemicals vs. POSCO Holdings | LG Chemicals vs. Hanwha Solutions | LG Chemicals vs. Lotte Chemical Corp | LG Chemicals vs. Hyundai Steel |
| Mirae Asset vs. InnoTherapy | Mirae Asset vs. Aprogen Healthcare Games | Mirae Asset vs. Pan Entertainment Co | Mirae Asset vs. GS Retail 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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