Correlation Between LG Chemicals and HYUNDAI BIOLAND
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and HYUNDAI BIOLAND 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 HYUNDAI BIOLAND into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and HYUNDAI BIOLAND CoLtd, you can compare the effects of market volatilities on LG Chemicals and HYUNDAI BIOLAND 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 HYUNDAI BIOLAND. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and HYUNDAI BIOLAND.
Diversification Opportunities for LG Chemicals and HYUNDAI BIOLAND
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 051910 and HYUNDAI is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and HYUNDAI BIOLAND CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYUNDAI BIOLAND CoLtd 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 HYUNDAI BIOLAND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYUNDAI BIOLAND CoLtd has no effect on the direction of LG Chemicals i.e., LG Chemicals and HYUNDAI BIOLAND go up and down completely randomly.
Pair Corralation between LG Chemicals and HYUNDAI BIOLAND
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the HYUNDAI BIOLAND. But the stock apears to be less risky and, when comparing its historical volatility, LG Chemicals is 1.46 times less risky than HYUNDAI BIOLAND. The stock trades about -0.09 of its potential returns per unit of risk. The HYUNDAI BIOLAND CoLtd is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 455,500 in HYUNDAI BIOLAND CoLtd on September 1, 2024 and sell it today you would lose (30,500) from holding HYUNDAI BIOLAND CoLtd or give up 6.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.45% |
| Values | Daily Returns |
LG Chemicals vs. HYUNDAI BIOLAND CoLtd
Performance |
| Timeline |
| LG Chemicals |
| HYUNDAI BIOLAND CoLtd |
LG Chemicals and HYUNDAI BIOLAND Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and HYUNDAI BIOLAND
The main advantage of trading using opposite LG Chemicals and HYUNDAI BIOLAND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, HYUNDAI BIOLAND 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 HYUNDAI BIOLAND will offset losses from the drop in HYUNDAI BIOLAND's long position.| LG Chemicals vs. Korea Investment Holdings | LG Chemicals vs. INNOX Advanced Materials | LG Chemicals vs. Union Materials Corp | LG Chemicals vs. DB Financial Investment |
| HYUNDAI BIOLAND vs. Korea Electronic Certification | HYUNDAI BIOLAND vs. Sangshin Electronics Co | HYUNDAI BIOLAND vs. Daejoo Electronic Materials | HYUNDAI BIOLAND vs. Visang Education |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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