Correlation Between LG Electronics and Mirae Asset
Can any of the company-specific risk be diversified away by investing in both LG Electronics and Mirae Asset 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 Mirae Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and Mirae Asset Daewoo, you can compare the effects of market volatilities on LG Electronics and Mirae Asset 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 Mirae Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and Mirae Asset.
Diversification Opportunities for LG Electronics and Mirae Asset
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 066570 and Mirae is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and Mirae Asset Daewoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirae Asset Daewoo 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 Mirae Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirae Asset Daewoo has no effect on the direction of LG Electronics i.e., LG Electronics and Mirae Asset go up and down completely randomly.
Pair Corralation between LG Electronics and Mirae Asset
Assuming the 90 days trading horizon LG Electronics is expected to generate 6.35 times less return on investment than Mirae Asset. But when comparing it to its historical volatility, LG Electronics is 5.27 times less risky than Mirae Asset. It trades about 0.04 of its potential returns per unit of risk. Mirae Asset Daewoo is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 427,000 in Mirae Asset Daewoo on August 27, 2024 and sell it today you would earn a total of 13,000 from holding Mirae Asset Daewoo or generate 3.04% 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. Mirae Asset Daewoo
Performance |
| Timeline |
| LG Electronics |
| Mirae Asset Daewoo |
LG Electronics and Mirae Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and Mirae Asset
The main advantage of trading using opposite LG Electronics and Mirae Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, Mirae Asset 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 Mirae Asset will offset losses from the drop in Mirae Asset's long position.| LG Electronics vs. Okins Electronics Co | LG Electronics vs. ABCO Electronics Co | LG Electronics vs. Sungmoon Electronics Co | LG Electronics vs. Sam Yang Foods |
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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