Correlation Between LG Chemicals and TSE
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and TSE 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 TSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and TSE Co, you can compare the effects of market volatilities on LG Chemicals and TSE 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 TSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and TSE.
Diversification Opportunities for LG Chemicals and TSE
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 051910 and TSE is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and TSE Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TSE Co 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 TSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TSE Co has no effect on the direction of LG Chemicals i.e., LG Chemicals and TSE go up and down completely randomly.
Pair Corralation between LG Chemicals and TSE
Assuming the 90 days trading horizon LG Chemicals is expected to generate 1.79 times less return on investment than TSE. In addition to that, LG Chemicals is 1.15 times more volatile than TSE Co. It trades about 0.11 of its total potential returns per unit of risk. TSE Co is currently generating about 0.23 per unit of volatility. If you would invest 4,030,000 in TSE Co on December 4, 2024 and sell it today you would earn a total of 450,000 from holding TSE Co or generate 11.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Chemicals vs. TSE Co
Performance |
| Timeline |
| LG Chemicals |
| TSE Co |
LG Chemicals and TSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and TSE
The main advantage of trading using opposite LG Chemicals and TSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, TSE 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 TSE will offset losses from the drop in TSE's long position.| LG Chemicals vs. GS Retail Co | LG Chemicals vs. PJ Electronics Co | LG Chemicals vs. ABCO Electronics Co | LG Chemicals vs. Mobase Electronics CoLtd |
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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