Correlation Between LG Chemicals and KT Hitel

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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

051910036030Diversified Away051910036030Diversified Away100%
0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between 051910 and 036030 is 0.93. 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 2.37 times more volatile than KT Hitel. It trades about -0.21 of its total potential returns per unit of risk. KT Hitel is currently generating about -0.21 per unit of volatility. If you would invest  360,500  in KT Hitel on November 5, 2024 and sell it today you would lose (11,000) from holding KT Hitel or give up 3.05% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

LG Chemicals  vs.  KT Hitel

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -25-20-15-10-505
JavaScript chart by amCharts 3.21.15051910 036030
       Timeline  
LG Chemicals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days LG Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJanFeb240,000250,000260,000270,000280,000290,000300,000310,000320,000
KT Hitel 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days KT Hitel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJanFeb3,3003,4003,5003,6003,7003,8003,9004,0004,100

LG Chemicals and KT Hitel Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.78-3.58-2.38-1.180.01.032.053.084.11 0.040.050.060.070.08
JavaScript chart by amCharts 3.21.15051910 036030
       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.
The idea behind LG Chemicals and KT Hitel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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