Correlation Between LG Chemicals and KT Hitel
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and KT Hitel 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 KT Hitel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and KT Hitel, you can compare the effects of market volatilities on LG Chemicals and KT Hitel 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 KT Hitel. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and KT Hitel.
Diversification Opportunities for LG Chemicals and KT Hitel
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 051910 and 036030 is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and KT Hitel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Hitel 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 KT Hitel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Hitel has no effect on the direction of LG Chemicals i.e., LG Chemicals and KT Hitel go up and down completely randomly.
Pair Corralation between LG Chemicals and KT Hitel
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the KT Hitel. In addition to that, LG Chemicals is 1.09 times more volatile than KT Hitel. It trades about -0.09 of its total potential returns per unit of risk. KT Hitel is currently generating about -0.06 per unit of volatility. If you would invest 655,000 in KT Hitel on August 31, 2024 and sell it today you would lose (278,500) from holding KT Hitel or give up 42.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Chemicals vs. KT Hitel
Performance |
| Timeline |
| LG Chemicals |
| KT Hitel |
LG Chemicals and KT Hitel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and KT Hitel
The main advantage of trading using opposite LG Chemicals and KT Hitel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, KT Hitel 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 KT Hitel will offset losses from the drop in KT Hitel's long position.| LG Chemicals vs. Orbitech Co | LG Chemicals vs. Shinsung Delta Tech | LG Chemicals vs. Sungchang Autotech Co | LG Chemicals vs. ECSTELECOM Co |
| KT Hitel vs. Han Kook Steel | KT Hitel vs. Hankuk Steel Wire | KT Hitel vs. Woori Technology Investment | KT Hitel vs. J Steel 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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