Correlation Between HYUNDAI BIOLAND and LG Household
Can any of the company-specific risk be diversified away by investing in both HYUNDAI BIOLAND and LG Household 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 HYUNDAI BIOLAND and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HYUNDAI BIOLAND CoLtd and LG Household Healthcare, you can compare the effects of market volatilities on HYUNDAI BIOLAND and LG Household 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 HYUNDAI BIOLAND with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of HYUNDAI BIOLAND and LG Household.
Diversification Opportunities for HYUNDAI BIOLAND and LG Household
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HYUNDAI and 051900 is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding HYUNDAI BIOLAND CoLtd and LG Household Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Household Healthcare and HYUNDAI BIOLAND 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 HYUNDAI BIOLAND CoLtd are associated (or correlated) with LG Household. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Household Healthcare has no effect on the direction of HYUNDAI BIOLAND i.e., HYUNDAI BIOLAND and LG Household go up and down completely randomly.
Pair Corralation between HYUNDAI BIOLAND and LG Household
Assuming the 90 days trading horizon HYUNDAI BIOLAND CoLtd is expected to generate 1.28 times more return on investment than LG Household. However, HYUNDAI BIOLAND is 1.28 times more volatile than LG Household Healthcare. It trades about 0.05 of its potential returns per unit of risk. LG Household Healthcare is currently generating about -0.11 per unit of risk. If you would invest 421,000 in HYUNDAI BIOLAND CoLtd on September 15, 2024 and sell it today you would earn a total of 8,500 from holding HYUNDAI BIOLAND CoLtd or generate 2.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
HYUNDAI BIOLAND CoLtd vs. LG Household Healthcare
Performance |
| Timeline |
| HYUNDAI BIOLAND CoLtd |
| LG Household Healthcare |
HYUNDAI BIOLAND and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HYUNDAI BIOLAND and LG Household
The main advantage of trading using opposite HYUNDAI BIOLAND and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HYUNDAI BIOLAND position performs unexpectedly, LG Household 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 LG Household will offset losses from the drop in LG Household's long position.| HYUNDAI BIOLAND vs. Pungguk Ethanol Industrial | HYUNDAI BIOLAND vs. Koryo Credit Information | HYUNDAI BIOLAND vs. Daejung Chemicals Metals | HYUNDAI BIOLAND vs. Seoul Food Industrial |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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