Correlation Between LG Electronics and Atec
Can any of the company-specific risk be diversified away by investing in both LG Electronics and Atec 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 Atec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and Atec Co, you can compare the effects of market volatilities on LG Electronics and Atec 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 Atec. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and Atec.
Diversification Opportunities for LG Electronics and Atec
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 066570 and Atec is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and Atec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atec 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 Atec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atec has no effect on the direction of LG Electronics i.e., LG Electronics and Atec go up and down completely randomly.
Pair Corralation between LG Electronics and Atec
Assuming the 90 days trading horizon LG Electronics is expected to under-perform the Atec. But the stock apears to be less risky and, when comparing its historical volatility, LG Electronics is 2.57 times less risky than Atec. The stock trades about -0.03 of its potential returns per unit of risk. The Atec Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 840,831 in Atec Co on December 4, 2024 and sell it today you would earn a total of 2,284,169 from holding Atec Co or generate 271.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
LG Electronics vs. Atec Co
Performance |
| Timeline |
| LG Electronics |
| Atec |
LG Electronics and Atec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and Atec
The main advantage of trading using opposite LG Electronics and Atec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, Atec 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 Atec will offset losses from the drop in Atec's long position.| LG Electronics vs. Dongbang Ship Machinery | LG Electronics vs. Daou Technology | LG Electronics vs. NewFlex Technology Co | LG Electronics vs. Keyang Electric Machinery |
| Atec vs. SEOJEON ELECTRIC MACHINERY | Atec vs. Keyang Electric Machinery | Atec vs. Hwacheon Machinery Co | Atec vs. Sam Yang Foods |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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