Correlation Between LG Electronics and GAMEVIL
Can any of the company-specific risk be diversified away by investing in both LG Electronics and GAMEVIL 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 GAMEVIL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and GAMEVIL, you can compare the effects of market volatilities on LG Electronics and GAMEVIL 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 GAMEVIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and GAMEVIL.
Diversification Opportunities for LG Electronics and GAMEVIL
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 066570 and GAMEVIL is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and GAMEVIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMEVIL 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 GAMEVIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMEVIL has no effect on the direction of LG Electronics i.e., LG Electronics and GAMEVIL go up and down completely randomly.
Pair Corralation between LG Electronics and GAMEVIL
Assuming the 90 days trading horizon LG Electronics is expected to generate 90.03 times less return on investment than GAMEVIL. But when comparing it to its historical volatility, LG Electronics is 5.76 times less risky than GAMEVIL. It trades about 0.01 of its potential returns per unit of risk. GAMEVIL is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,345,000 in GAMEVIL on September 1, 2024 and sell it today you would earn a total of 915,000 from holding GAMEVIL or generate 39.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Electronics vs. GAMEVIL
Performance |
| Timeline |
| LG Electronics |
| GAMEVIL |
LG Electronics and GAMEVIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and GAMEVIL
The main advantage of trading using opposite LG Electronics and GAMEVIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, GAMEVIL 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 GAMEVIL will offset losses from the drop in GAMEVIL's long position.| LG Electronics vs. Hyundai Green Food | LG Electronics vs. Seoul Food Industrial | LG Electronics vs. Haitai Confectionery Foods | LG Electronics vs. LS Materials |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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