Correlation Between LG Electronics and Ezwelfare
Can any of the company-specific risk be diversified away by investing in both LG Electronics and Ezwelfare 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 Ezwelfare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and Ezwelfare Co, you can compare the effects of market volatilities on LG Electronics and Ezwelfare 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 Ezwelfare. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and Ezwelfare.
Diversification Opportunities for LG Electronics and Ezwelfare
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 066570 and Ezwelfare is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and Ezwelfare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ezwelfare 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 Ezwelfare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ezwelfare has no effect on the direction of LG Electronics i.e., LG Electronics and Ezwelfare go up and down completely randomly.
Pair Corralation between LG Electronics and Ezwelfare
Assuming the 90 days trading horizon LG Electronics is expected to generate 1.0 times more return on investment than Ezwelfare. However, LG Electronics is 1.0 times less risky than Ezwelfare. It trades about -0.01 of its potential returns per unit of risk. Ezwelfare Co is currently generating about -0.02 per unit of risk. If you would invest 9,737,219 in LG Electronics on September 12, 2024 and sell it today you would lose (1,307,219) from holding LG Electronics or give up 13.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Electronics vs. Ezwelfare Co
Performance |
| Timeline |
| LG Electronics |
| Ezwelfare |
LG Electronics and Ezwelfare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and Ezwelfare
The main advantage of trading using opposite LG Electronics and Ezwelfare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, Ezwelfare 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 Ezwelfare will offset losses from the drop in Ezwelfare's long position.| LG Electronics vs. Kbi Metal Co | LG Electronics vs. Mobile Appliance | LG Electronics vs. Duksan Hi Metal | LG Electronics vs. Lotte Data Communication |
| Ezwelfare vs. Hana Materials | Ezwelfare vs. NewFlex Technology Co | Ezwelfare vs. INNOX Advanced Materials | Ezwelfare vs. Puloon Technology |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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