Correlation Between LG Chemicals and Korea Alcohol
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and Korea Alcohol 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 Korea Alcohol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and Korea Alcohol Industrial, you can compare the effects of market volatilities on LG Chemicals and Korea Alcohol 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 Korea Alcohol. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and Korea Alcohol.
Diversification Opportunities for LG Chemicals and Korea Alcohol
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 051910 and Korea is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and Korea Alcohol Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Alcohol Industrial 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 Korea Alcohol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Alcohol Industrial has no effect on the direction of LG Chemicals i.e., LG Chemicals and Korea Alcohol go up and down completely randomly.
Pair Corralation between LG Chemicals and Korea Alcohol
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the Korea Alcohol. In addition to that, LG Chemicals is 2.02 times more volatile than Korea Alcohol Industrial. It trades about -0.14 of its total potential returns per unit of risk. Korea Alcohol Industrial is currently generating about -0.14 per unit of volatility. If you would invest 905,000 in Korea Alcohol Industrial on August 25, 2024 and sell it today you would lose (41,000) from holding Korea Alcohol Industrial or give up 4.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Chemicals vs. Korea Alcohol Industrial
Performance |
| Timeline |
| LG Chemicals |
| Korea Alcohol Industrial |
LG Chemicals and Korea Alcohol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and Korea Alcohol
The main advantage of trading using opposite LG Chemicals and Korea Alcohol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, Korea Alcohol 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 Korea Alcohol will offset losses from the drop in Korea Alcohol's long position.| LG Chemicals vs. POSCO Holdings | LG Chemicals vs. Lotte Chemical Corp | LG Chemicals vs. Hyundai Steel | LG Chemicals vs. Dongkuk Steel Mill |
| Korea Alcohol vs. LG Chemicals | Korea Alcohol vs. POSCO Holdings | Korea Alcohol vs. Lotte Chemical Corp | Korea Alcohol vs. Hyundai Steel |
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.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |