Correlation Between LG Electronics and Korea Environment
Can any of the company-specific risk be diversified away by investing in both LG Electronics and Korea Environment 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 Electronics and Korea Environment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and Korea Environment Technology, you can compare the effects of market volatilities on LG Electronics and Korea Environment 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 Electronics with a short position of Korea Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and Korea Environment.
Diversification Opportunities for LG Electronics and Korea Environment
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 066570 and Korea is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and Korea Environment Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Environment and LG Electronics 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 Electronics are associated (or correlated) with Korea Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Environment has no effect on the direction of LG Electronics i.e., LG Electronics and Korea Environment go up and down completely randomly.
Pair Corralation between LG Electronics and Korea Environment
Assuming the 90 days trading horizon LG Electronics is expected to under-perform the Korea Environment. In addition to that, LG Electronics is 1.63 times more volatile than Korea Environment Technology. It trades about 0.0 of its total potential returns per unit of risk. Korea Environment Technology is currently generating about 0.06 per unit of volatility. If you would invest 680,095 in Korea Environment Technology on September 27, 2024 and sell it today you would earn a total of 221,905 from holding Korea Environment Technology or generate 32.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Electronics vs. Korea Environment Technology
Performance |
| Timeline |
| LG Electronics |
| Korea Environment |
LG Electronics and Korea Environment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and Korea Environment
The main advantage of trading using opposite LG Electronics and Korea Environment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, Korea Environment 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 Korea Environment will offset losses from the drop in Korea Environment's long position.| LG Electronics vs. Lotte Non Life Insurance | LG Electronics vs. Shinhan Financial Group | LG Electronics vs. KakaoBank Corp | LG Electronics vs. Jb Financial |
| Korea Environment vs. INSUN Environmental New | Korea Environment vs. LEENO Industrial | Korea Environment vs. Kmw Inc | Korea Environment vs. NICE Information Service |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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