Correlation Between LG Electronics and FOODWELL
Can any of the company-specific risk be diversified away by investing in both LG Electronics and FOODWELL 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 FOODWELL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and FOODWELL Co, you can compare the effects of market volatilities on LG Electronics and FOODWELL 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 FOODWELL. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and FOODWELL.
Diversification Opportunities for LG Electronics and FOODWELL
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 066570 and FOODWELL is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and FOODWELL Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOODWELL 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 FOODWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOODWELL has no effect on the direction of LG Electronics i.e., LG Electronics and FOODWELL go up and down completely randomly.
Pair Corralation between LG Electronics and FOODWELL
Assuming the 90 days trading horizon LG Electronics is expected to generate 0.66 times more return on investment than FOODWELL. However, LG Electronics is 1.52 times less risky than FOODWELL. It trades about 0.08 of its potential returns per unit of risk. FOODWELL Co is currently generating about -0.01 per unit of risk. If you would invest 9,240,000 in LG Electronics on August 28, 2024 and sell it today you would earn a total of 210,000 from holding LG Electronics or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Electronics vs. FOODWELL Co
Performance |
| Timeline |
| LG Electronics |
| FOODWELL |
LG Electronics and FOODWELL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and FOODWELL
The main advantage of trading using opposite LG Electronics and FOODWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, FOODWELL 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 FOODWELL will offset losses from the drop in FOODWELL's long position.| LG Electronics vs. AptaBio Therapeutics | LG Electronics vs. Daewoo SBI SPAC | LG Electronics vs. Dream Security co | LG Electronics vs. Microfriend |
| FOODWELL vs. AptaBio Therapeutics | FOODWELL vs. Daewoo SBI SPAC | FOODWELL vs. Dream Security co | FOODWELL vs. Microfriend |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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