Correlation Between LG Chemicals and Shinhan Inverse
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and Shinhan Inverse 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 Shinhan Inverse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and Shinhan Inverse Silver, you can compare the effects of market volatilities on LG Chemicals and Shinhan Inverse 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 Shinhan Inverse. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and Shinhan Inverse.
Diversification Opportunities for LG Chemicals and Shinhan Inverse
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between 051910 and Shinhan is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and Shinhan Inverse Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Inverse Silver 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 Shinhan Inverse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Inverse Silver has no effect on the direction of LG Chemicals i.e., LG Chemicals and Shinhan Inverse go up and down completely randomly.
Pair Corralation between LG Chemicals and Shinhan Inverse
Assuming the 90 days trading horizon LG Chemicals is expected to under-perform the Shinhan Inverse. In addition to that, LG Chemicals is 1.4 times more volatile than Shinhan Inverse Silver. It trades about -0.23 of its total potential returns per unit of risk. Shinhan Inverse Silver is currently generating about 0.21 per unit of volatility. If you would invest 325,500 in Shinhan Inverse Silver on August 27, 2024 and sell it today you would earn a total of 26,500 from holding Shinhan Inverse Silver or generate 8.14% 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. Shinhan Inverse Silver
Performance |
| Timeline |
| LG Chemicals |
| Shinhan Inverse Silver |
LG Chemicals and Shinhan Inverse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Chemicals and Shinhan Inverse
The main advantage of trading using opposite LG Chemicals and Shinhan Inverse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, Shinhan Inverse 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 Shinhan Inverse will offset losses from the drop in Shinhan Inverse's long position.| LG Chemicals vs. National Plastic Co | LG Chemicals vs. Korea Petro Chemical | LG Chemicals vs. Ssangyong Materials Corp | LG Chemicals vs. INNOX Advanced Materials |
| Shinhan Inverse vs. Sangsin Energy Display | Shinhan Inverse vs. LG Display Co | Shinhan Inverse vs. Sunny Electronics Corp | Shinhan Inverse vs. Samji Electronics 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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