Correlation Between LG Electronics and APS Holdings
Can any of the company-specific risk be diversified away by investing in both LG Electronics and APS Holdings 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 APS Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics Pfd and APS Holdings, you can compare the effects of market volatilities on LG Electronics and APS Holdings 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 APS Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and APS Holdings.
Diversification Opportunities for LG Electronics and APS Holdings
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between 066575 and APS is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics Pfd and APS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APS Holdings 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 Pfd are associated (or correlated) with APS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APS Holdings has no effect on the direction of LG Electronics i.e., LG Electronics and APS Holdings go up and down completely randomly.
Pair Corralation between LG Electronics and APS Holdings
Assuming the 90 days trading horizon LG Electronics Pfd is expected to under-perform the APS Holdings. But the stock apears to be less risky and, when comparing its historical volatility, LG Electronics Pfd is 2.97 times less risky than APS Holdings. The stock trades about -0.18 of its potential returns per unit of risk. The APS Holdings is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 469,500 in APS Holdings on December 1, 2024 and sell it today you would earn a total of 144,500 from holding APS Holdings or generate 30.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Electronics Pfd vs. APS Holdings
Performance |
| Timeline |
| LG Electronics Pfd |
| APS Holdings |
LG Electronics and APS Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and APS Holdings
The main advantage of trading using opposite LG Electronics and APS Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, APS Holdings 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 APS Holdings will offset losses from the drop in APS Holdings' long position.| LG Electronics vs. MetaLabs Co | LG Electronics vs. Solus Advanced Materials | LG Electronics vs. Kyeryong Construction Industrial | LG Electronics vs. Songwon Industrial Co |
| APS Holdings vs. Next Entertainment World | APS Holdings vs. Samsung Life Insurance | APS Holdings vs. Hana Financial | APS Holdings vs. BNK Financial Group |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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