Correlation Between LG Chemicals and Aniplus
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and Aniplus 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 Aniplus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and Aniplus, you can compare the effects of market volatilities on LG Chemicals and Aniplus 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 Aniplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and Aniplus.
Diversification Opportunities for LG Chemicals and Aniplus
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 051910 and Aniplus is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and Aniplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aniplus 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 Aniplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aniplus has no effect on the direction of LG Chemicals i.e., LG Chemicals and Aniplus go up and down completely randomly.
Pair Corralation between LG Chemicals and Aniplus
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the Aniplus. But the stock apears to be less risky and, when comparing its historical volatility, LG Chemicals is 1.08 times less risky than Aniplus. The stock trades about -0.1 of its potential returns per unit of risk. The Aniplus is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 380,500 in Aniplus on September 4, 2024 and sell it today you would lose (125,500) from holding Aniplus or give up 32.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Chemicals vs. Aniplus
Performance |
| Timeline |
| LG Chemicals |
| Aniplus |
LG Chemicals and Aniplus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and Aniplus
The main advantage of trading using opposite LG Chemicals and Aniplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, Aniplus 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 Aniplus will offset losses from the drop in Aniplus' long position.| LG Chemicals vs. POSCO Holdings | LG Chemicals vs. Hanwha Solutions | LG Chemicals vs. Lotte Chemical Corp | LG Chemicals vs. Hyundai Steel |
| Aniplus vs. Lotte Data Communication | Aniplus vs. Ssangyong Information Communication | Aniplus vs. Hankuk Steel Wire | Aniplus vs. Shin Steel 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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