Correlation Between LG Electronics and Genie Music
Can any of the company-specific risk be diversified away by investing in both LG Electronics and Genie Music 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 Genie Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and Genie Music, you can compare the effects of market volatilities on LG Electronics and Genie Music 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 Genie Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and Genie Music.
Diversification Opportunities for LG Electronics and Genie Music
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 066570 and Genie is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and Genie Music in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genie Music 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 Genie Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genie Music has no effect on the direction of LG Electronics i.e., LG Electronics and Genie Music go up and down completely randomly.
Pair Corralation between LG Electronics and Genie Music
Assuming the 90 days trading horizon LG Electronics is expected to generate 0.69 times more return on investment than Genie Music. However, LG Electronics is 1.44 times less risky than Genie Music. It trades about -0.03 of its potential returns per unit of risk. Genie Music is currently generating about -0.15 per unit of risk. If you would invest 9,080,000 in LG Electronics on September 2, 2024 and sell it today you would lose (110,000) from holding LG Electronics or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Electronics vs. Genie Music
Performance |
| Timeline |
| LG Electronics |
| Genie Music |
LG Electronics and Genie Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and Genie Music
The main advantage of trading using opposite LG Electronics and Genie Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, Genie Music 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 Genie Music will offset losses from the drop in Genie Music's long position.| LG Electronics vs. AptaBio Therapeutics | LG Electronics vs. Daewoo SBI SPAC | LG Electronics vs. Dream Security co | LG Electronics vs. Microfriend |
| Genie Music vs. AfreecaTV Co | Genie Music vs. Seegene | Genie Music vs. SS TECH | Genie Music vs. Busan Industrial 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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