Correlation Between LG Electronics and Woori Technology
Can any of the company-specific risk be diversified away by investing in both LG Electronics and Woori 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 Woori 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 Woori Technology, you can compare the effects of market volatilities on LG Electronics and Woori 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 Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and Woori Technology.
Diversification Opportunities for LG Electronics and Woori Technology
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 066570 and Woori is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and Woori Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori 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 Woori Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Technology has no effect on the direction of LG Electronics i.e., LG Electronics and Woori Technology go up and down completely randomly.
Pair Corralation between LG Electronics and Woori Technology
Assuming the 90 days trading horizon LG Electronics is expected to generate 0.44 times more return on investment than Woori Technology. However, LG Electronics is 2.25 times less risky than Woori Technology. It trades about 0.08 of its potential returns per unit of risk. Woori Technology is currently generating about 0.01 per unit of risk. If you would invest 9,240,000 in LG Electronics on August 29, 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Electronics vs. Woori Technology
Performance |
| Timeline |
| LG Electronics |
| Woori Technology |
LG Electronics and Woori Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and Woori Technology
The main advantage of trading using opposite LG Electronics and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, Woori 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 Woori Technology will offset losses from the drop in Woori Technology's long position.| LG Electronics vs. AptaBio Therapeutics | LG Electronics vs. Daewoo SBI SPAC | LG Electronics vs. Dream Security co | LG Electronics vs. Microfriend |
| Woori Technology vs. Korea Real Estate | Woori Technology vs. Korea Ratings Co | Woori Technology vs. IQuest Co | Woori Technology vs. Wonbang Tech Co |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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