Correlation Between LG Chemicals and Hyundai Mobis
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and Hyundai Mobis 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 Hyundai Mobis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and Hyundai Mobis, you can compare the effects of market volatilities on LG Chemicals and Hyundai Mobis 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 Hyundai Mobis. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and Hyundai Mobis.
Diversification Opportunities for LG Chemicals and Hyundai Mobis
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 051910 and Hyundai is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and Hyundai Mobis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Mobis 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 Hyundai Mobis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Mobis has no effect on the direction of LG Chemicals i.e., LG Chemicals and Hyundai Mobis go up and down completely randomly.
Pair Corralation between LG Chemicals and Hyundai Mobis
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the Hyundai Mobis. In addition to that, LG Chemicals is 1.33 times more volatile than Hyundai Mobis. It trades about -0.06 of its total potential returns per unit of risk. Hyundai Mobis is currently generating about 0.03 per unit of volatility. If you would invest 20,017,500 in Hyundai Mobis on August 28, 2024 and sell it today you would earn a total of 4,632,500 from holding Hyundai Mobis or generate 23.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Chemicals vs. Hyundai Mobis
Performance |
| Timeline |
| LG Chemicals |
| Hyundai Mobis |
LG Chemicals and Hyundai Mobis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and Hyundai Mobis
The main advantage of trading using opposite LG Chemicals and Hyundai Mobis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, Hyundai Mobis 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 Hyundai Mobis will offset losses from the drop in Hyundai Mobis' long position.| LG Chemicals vs. National Plastic Co | LG Chemicals vs. Korea Petro Chemical | LG Chemicals vs. Ssangyong Materials Corp | LG Chemicals vs. INNOX Advanced Materials |
| Hyundai Mobis vs. Sejong Telecom | Hyundai Mobis vs. Hanjin Transportation Co | Hyundai Mobis vs. GS Retail Co | Hyundai Mobis vs. Automobile Pc |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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