Correlation Between LG Chemicals and Daewon Media
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and Daewon Media 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 Daewon Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and Daewon Media Co, you can compare the effects of market volatilities on LG Chemicals and Daewon Media 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 Daewon Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and Daewon Media.
Diversification Opportunities for LG Chemicals and Daewon Media
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 051910 and Daewon is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and Daewon Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewon Media 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 Daewon Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewon Media has no effect on the direction of LG Chemicals i.e., LG Chemicals and Daewon Media go up and down completely randomly.
Pair Corralation between LG Chemicals and Daewon Media
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the Daewon Media. In addition to that, LG Chemicals is 1.43 times more volatile than Daewon Media Co. It trades about -0.08 of its total potential returns per unit of risk. Daewon Media Co is currently generating about -0.03 per unit of volatility. If you would invest 1,149,967 in Daewon Media Co on October 16, 2024 and sell it today you would lose (239,967) from holding Daewon Media Co or give up 20.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Chemicals vs. Daewon Media Co
Performance |
| Timeline |
| LG Chemicals |
| Daewon Media |
LG Chemicals and Daewon Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and Daewon Media
The main advantage of trading using opposite LG Chemicals and Daewon Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, Daewon Media 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 Daewon Media will offset losses from the drop in Daewon Media's long position.| LG Chemicals vs. E Investment Development | LG Chemicals vs. Daol Investment Securities | LG Chemicals vs. Golden Bridge Investment | LG Chemicals vs. Sangsangin Investment Securities |
| Daewon Media vs. LG Chemicals | Daewon Media vs. Kbi Metal Co | Daewon Media vs. E Investment Development | Daewon Media vs. Korea Investment Holdings |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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