Correlation Between LG Electronics and Konan Technology
Can any of the company-specific risk be diversified away by investing in both LG Electronics and Konan Technology 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 Konan Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and Konan Technology, you can compare the effects of market volatilities on LG Electronics and Konan Technology 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 Konan Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and Konan Technology.
Diversification Opportunities for LG Electronics and Konan Technology
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 066570 and Konan is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and Konan Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Konan Technology 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 Konan Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Konan Technology has no effect on the direction of LG Electronics i.e., LG Electronics and Konan Technology go up and down completely randomly.
Pair Corralation between LG Electronics and Konan Technology
Assuming the 90 days trading horizon LG Electronics is expected to generate 12.33 times less return on investment than Konan Technology. But when comparing it to its historical volatility, LG Electronics is 2.77 times less risky than Konan Technology. It trades about 0.01 of its potential returns per unit of risk. Konan Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 977,500 in Konan Technology on September 3, 2024 and sell it today you would earn a total of 1,532,500 from holding Konan Technology or generate 156.78% 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. Konan Technology
Performance |
| Timeline |
| LG Electronics |
| Konan Technology |
LG Electronics and Konan Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and Konan Technology
The main advantage of trading using opposite LG Electronics and Konan Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, Konan Technology 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 Konan Technology will offset losses from the drop in Konan Technology's long position.| LG Electronics vs. Lindeman Asia Investment | LG Electronics vs. EBEST Investment Securities | LG Electronics vs. Sangsangin Investment Securities | LG Electronics vs. Shinhan Inverse Silver |
| Konan Technology vs. Posco ICT | Konan Technology vs. Devsisters corporation | Konan Technology vs. Alchera | Konan Technology vs. Nice Information Telecommunication |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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