Correlation Between LG Electronics and LG Electronics
Can any of the company-specific risk be diversified away by investing in both LG Electronics and LG Electronics 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 LG Electronics 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 LG Electronics, you can compare the effects of market volatilities on LG Electronics and LG Electronics 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 LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and LG Electronics.
Diversification Opportunities for LG Electronics and LG Electronics
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 066575 and 066570 is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics Pfd and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics 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 LG Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics has no effect on the direction of LG Electronics i.e., LG Electronics and LG Electronics go up and down completely randomly.
Pair Corralation between LG Electronics and LG Electronics
Assuming the 90 days trading horizon LG Electronics Pfd is expected to generate 0.81 times more return on investment than LG Electronics. However, LG Electronics Pfd is 1.23 times less risky than LG Electronics. It trades about -0.02 of its potential returns per unit of risk. LG Electronics is currently generating about -0.02 per unit of risk. If you would invest 4,672,973 in LG Electronics Pfd on November 27, 2024 and sell it today you would lose (767,973) from holding LG Electronics Pfd or give up 16.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Electronics Pfd vs. LG Electronics
Performance |
| Timeline |
| LG Electronics Pfd |
| LG Electronics |
LG Electronics and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and LG Electronics
The main advantage of trading using opposite LG Electronics and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, LG Electronics 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 LG Electronics will offset losses from the drop in LG Electronics' long position.| LG Electronics vs. SK Chemicals Co | LG Electronics vs. Daejung Chemicals Metals | LG Electronics vs. National Plastic Co | LG Electronics vs. LG Chemicals |
| LG Electronics vs. AptaBio Therapeutics | LG Electronics vs. Daewoo SBI SPAC | LG Electronics vs. Dream Security co | LG Electronics vs. Microfriend |
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.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |