Correlation Between LG Chemicals and Lindeman Asia
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and Lindeman Asia 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 Lindeman Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and Lindeman Asia Investment, you can compare the effects of market volatilities on LG Chemicals and Lindeman Asia 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 Lindeman Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and Lindeman Asia.
Diversification Opportunities for LG Chemicals and Lindeman Asia
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between 051910 and Lindeman is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and Lindeman Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindeman Asia Investment 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 Lindeman Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindeman Asia Investment has no effect on the direction of LG Chemicals i.e., LG Chemicals and Lindeman Asia go up and down completely randomly.
Pair Corralation between LG Chemicals and Lindeman Asia
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the Lindeman Asia. But the stock apears to be less risky and, when comparing its historical volatility, LG Chemicals is 1.86 times less risky than Lindeman Asia. The stock trades about -0.07 of its potential returns per unit of risk. The Lindeman Asia Investment is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 417,317 in Lindeman Asia Investment on October 23, 2024 and sell it today you would earn a total of 10,183 from holding Lindeman Asia Investment or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Chemicals vs. Lindeman Asia Investment
Performance |
| Timeline |
| LG Chemicals |
| Lindeman Asia Investment |
LG Chemicals and Lindeman Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and Lindeman Asia
The main advantage of trading using opposite LG Chemicals and Lindeman Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, Lindeman Asia 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 Lindeman Asia will offset losses from the drop in Lindeman Asia's long position.| LG Chemicals vs. Daol Investment Securities | LG Chemicals vs. Finebesteel | LG Chemicals vs. Daechang Steel Co | LG Chemicals vs. Leaders Technology Investment |
| Lindeman Asia vs. Industrial Bank | Lindeman Asia vs. Nice Information Telecommunication | Lindeman Asia vs. Jeong Moon Information | Lindeman Asia vs. DataSolution |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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