Correlation Between LG Chemicals and Seoam Machinery
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and Seoam Machinery 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 Seoam Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and Seoam Machinery Industry, you can compare the effects of market volatilities on LG Chemicals and Seoam Machinery 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 Seoam Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and Seoam Machinery.
Diversification Opportunities for LG Chemicals and Seoam Machinery
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 051910 and Seoam is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and Seoam Machinery Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoam Machinery Industry 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 Seoam Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoam Machinery Industry has no effect on the direction of LG Chemicals i.e., LG Chemicals and Seoam Machinery go up and down completely randomly.
Pair Corralation between LG Chemicals and Seoam Machinery
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the Seoam Machinery. But the stock apears to be less risky and, when comparing its historical volatility, LG Chemicals is 1.09 times less risky than Seoam Machinery. The stock trades about -0.07 of its potential returns per unit of risk. The Seoam Machinery Industry is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 381,500 in Seoam Machinery Industry on August 30, 2024 and sell it today you would earn a total of 12,500 from holding Seoam Machinery Industry or generate 3.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Chemicals vs. Seoam Machinery Industry
Performance |
| Timeline |
| LG Chemicals |
| Seoam Machinery Industry |
LG Chemicals and Seoam Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and Seoam Machinery
The main advantage of trading using opposite LG Chemicals and Seoam Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, Seoam Machinery 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 Seoam Machinery will offset losses from the drop in Seoam Machinery's long position.| LG Chemicals vs. Woori Technology | LG Chemicals vs. Lion Chemtech Co | LG Chemicals vs. Sungchang Autotech Co | LG Chemicals vs. POSCO M TECH Co |
| Seoam Machinery vs. Namhwa Industrial Co | Seoam Machinery vs. Daiyang Metal Co | Seoam Machinery vs. Kumho Industrial Co | Seoam Machinery vs. MetaLabs 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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