Correlation Between LG Chemicals and LockLock
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and LockLock 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 LockLock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and LockLock Co, you can compare the effects of market volatilities on LG Chemicals and LockLock 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 LockLock. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and LockLock.
Diversification Opportunities for LG Chemicals and LockLock
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 051910 and LockLock is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and LockLock Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LockLock 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 LockLock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LockLock has no effect on the direction of LG Chemicals i.e., LG Chemicals and LockLock go up and down completely randomly.
Pair Corralation between LG Chemicals and LockLock
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the LockLock. In addition to that, LG Chemicals is 30.48 times more volatile than LockLock Co. It trades about -0.22 of its total potential returns per unit of risk. LockLock Co is currently generating about 0.06 per unit of volatility. If you would invest 865,000 in LockLock Co on September 4, 2024 and sell it today you would earn a total of 1,000.00 from holding LockLock Co or generate 0.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
LG Chemicals vs. LockLock Co
Performance |
| Timeline |
| LG Chemicals |
| LockLock |
LG Chemicals and LockLock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and LockLock
The main advantage of trading using opposite LG Chemicals and LockLock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, LockLock 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 LockLock will offset losses from the drop in LockLock's long position.| LG Chemicals vs. POSCO Holdings | LG Chemicals vs. Hanwha Solutions | LG Chemicals vs. Lotte Chemical Corp | LG Chemicals vs. Hyundai Steel |
| LockLock vs. LG Chemicals | LockLock vs. POSCO Holdings | LockLock vs. Hanwha Solutions | LockLock vs. Lotte Chemical Corp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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