Correlation Between LG Electronics and E Investment
Can any of the company-specific risk be diversified away by investing in both LG Electronics and E Investment 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 E Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and E Investment Development, you can compare the effects of market volatilities on LG Electronics and E Investment 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 E Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and E Investment.
Diversification Opportunities for LG Electronics and E Investment
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 066570 and 093230 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and E Investment Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Investment Development 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 E Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Investment Development has no effect on the direction of LG Electronics i.e., LG Electronics and E Investment go up and down completely randomly.
Pair Corralation between LG Electronics and E Investment
Assuming the 90 days trading horizon LG Electronics is expected to generate 6.35 times less return on investment than E Investment. But when comparing it to its historical volatility, LG Electronics is 1.96 times less risky than E Investment. It trades about 0.01 of its potential returns per unit of risk. E Investment Development is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 102,500 in E Investment Development on September 4, 2024 and sell it today you would earn a total of 36,700 from holding E Investment Development or generate 35.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Electronics vs. E Investment Development
Performance |
| Timeline |
| LG Electronics |
| E Investment Development |
LG Electronics and E Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and E Investment
The main advantage of trading using opposite LG Electronics and E Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, E Investment 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 E Investment will offset losses from the drop in E Investment's long position.| LG Electronics vs. E Investment Development | LG Electronics vs. Samsung Life Insurance | LG Electronics vs. Alton Sports CoLtd | LG Electronics vs. Sangsangin Investment Securities |
| E Investment vs. Dongsin Engineering Construction | E Investment vs. Doosan Fuel Cell | E Investment vs. Daishin Balance 1 | E Investment vs. Total Soft Bank |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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