Correlation Between LG Electronics and GeneBioTech
Can any of the company-specific risk be diversified away by investing in both LG Electronics and GeneBioTech 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 GeneBioTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and GeneBioTech Co, you can compare the effects of market volatilities on LG Electronics and GeneBioTech 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 GeneBioTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and GeneBioTech.
Diversification Opportunities for LG Electronics and GeneBioTech
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 066570 and GeneBioTech is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and GeneBioTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeneBioTech 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 GeneBioTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeneBioTech has no effect on the direction of LG Electronics i.e., LG Electronics and GeneBioTech go up and down completely randomly.
Pair Corralation between LG Electronics and GeneBioTech
Assuming the 90 days trading horizon LG Electronics is expected to generate 1.54 times more return on investment than GeneBioTech. However, LG Electronics is 1.54 times more volatile than GeneBioTech Co. It trades about -0.06 of its potential returns per unit of risk. GeneBioTech Co is currently generating about -0.46 per unit of risk. If you would invest 8,540,000 in LG Electronics on November 7, 2024 and sell it today you would lose (120,000) from holding LG Electronics or give up 1.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 94.12% |
| Values | Daily Returns |
LG Electronics vs. GeneBioTech Co
Performance |
| Timeline |
| LG Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| GeneBioTech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
LG Electronics and GeneBioTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and GeneBioTech
The main advantage of trading using opposite LG Electronics and GeneBioTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, GeneBioTech 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 GeneBioTech will offset losses from the drop in GeneBioTech's long position.| LG Electronics vs. INFINITT Healthcare Co | LG Electronics vs. UJU Electronics Co | LG Electronics vs. Nasmedia Co | LG Electronics vs. INNOX Advanced Materials |
| GeneBioTech vs. Pan Entertainment Co | GeneBioTech vs. People Technology | GeneBioTech vs. Korea Plasma Technology | GeneBioTech vs. Barunson Entertainment Arts |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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