Correlation Between LG Chemicals and A Tech
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and A Tech 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 A Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and A Tech Solution Co, you can compare the effects of market volatilities on LG Chemicals and A Tech 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 A Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and A Tech.
Diversification Opportunities for LG Chemicals and A Tech
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 051910 and 071670 is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and A Tech Solution Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A Tech Solution 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 A Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A Tech Solution has no effect on the direction of LG Chemicals i.e., LG Chemicals and A Tech go up and down completely randomly.
Pair Corralation between LG Chemicals and A Tech
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the A Tech. In addition to that, LG Chemicals is 1.0 times more volatile than A Tech Solution Co. It trades about -0.09 of its total potential returns per unit of risk. A Tech Solution Co is currently generating about -0.07 per unit of volatility. If you would invest 1,173,000 in A Tech Solution Co on August 31, 2024 and sell it today you would lose (590,000) from holding A Tech Solution Co or give up 50.3% 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. A Tech Solution Co
Performance |
| Timeline |
| LG Chemicals |
| A Tech Solution |
LG Chemicals and A Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and A Tech
The main advantage of trading using opposite LG Chemicals and A Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, A Tech 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 A Tech will offset losses from the drop in A Tech'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 |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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