Correlation Between LG Chemicals and Sewoon Medical
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and Sewoon Medical 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 Sewoon Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and Sewoon Medical Co, you can compare the effects of market volatilities on LG Chemicals and Sewoon Medical 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 Sewoon Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and Sewoon Medical.
Diversification Opportunities for LG Chemicals and Sewoon Medical
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 051910 and Sewoon is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and Sewoon Medical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sewoon Medical 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 Sewoon Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sewoon Medical has no effect on the direction of LG Chemicals i.e., LG Chemicals and Sewoon Medical go up and down completely randomly.
Pair Corralation between LG Chemicals and Sewoon Medical
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the Sewoon Medical. In addition to that, LG Chemicals is 1.54 times more volatile than Sewoon Medical Co. It trades about -0.09 of its total potential returns per unit of risk. Sewoon Medical Co is currently generating about -0.01 per unit of volatility. If you would invest 281,958 in Sewoon Medical Co on August 31, 2024 and sell it today you would lose (26,458) from holding Sewoon Medical Co or give up 9.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
LG Chemicals vs. Sewoon Medical Co
Performance |
| Timeline |
| LG Chemicals |
| Sewoon Medical |
LG Chemicals and Sewoon Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and Sewoon Medical
The main advantage of trading using opposite LG Chemicals and Sewoon Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, Sewoon Medical 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 Sewoon Medical will offset losses from the drop in Sewoon Medical'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 |
| Sewoon Medical vs. AptaBio Therapeutics | Sewoon Medical vs. KT Hitel | Sewoon Medical vs. SillaJen | Sewoon Medical vs. Cytogen |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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