Correlation Between LG Chemicals and Wonil Special
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and Wonil Special 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 Wonil Special into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and Wonil Special Steel, you can compare the effects of market volatilities on LG Chemicals and Wonil Special 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 Wonil Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and Wonil Special.
Diversification Opportunities for LG Chemicals and Wonil Special
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 051910 and Wonil is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and Wonil Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonil Special Steel 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 Wonil Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonil Special Steel has no effect on the direction of LG Chemicals i.e., LG Chemicals and Wonil Special go up and down completely randomly.
Pair Corralation between LG Chemicals and Wonil Special
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the Wonil Special. In addition to that, LG Chemicals is 2.08 times more volatile than Wonil Special Steel. It trades about -0.09 of its total potential returns per unit of risk. Wonil Special Steel is currently generating about -0.05 per unit of volatility. If you would invest 843,888 in Wonil Special Steel on November 9, 2024 and sell it today you would lose (127,888) from holding Wonil Special Steel or give up 15.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Chemicals vs. Wonil Special Steel
Performance |
| Timeline |
| LG Chemicals |
| Wonil Special Steel |
LG Chemicals and Wonil Special Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and Wonil Special
The main advantage of trading using opposite LG Chemicals and Wonil Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, Wonil Special 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 Wonil Special will offset losses from the drop in Wonil Special's long position.| LG Chemicals vs. ITM Semiconductor Co | LG Chemicals vs. ABOV Semiconductor Co | LG Chemicals vs. CG Hi Tech | LG Chemicals vs. Seoul Semiconductor Co |
| Wonil Special vs. Tae Kyung Chemical | Wonil Special vs. TK Chemical | Wonil Special vs. DSC Investment | Wonil Special vs. Samyung Trading 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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