Correlation Between LG Electronics and IM CoLtd
Can any of the company-specific risk be diversified away by investing in both LG Electronics and IM CoLtd 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 IM CoLtd 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 IM CoLtd, you can compare the effects of market volatilities on LG Electronics and IM CoLtd 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 IM CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and IM CoLtd.
Diversification Opportunities for LG Electronics and IM CoLtd
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 066575 and 101390 is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics Pfd and IM CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IM CoLtd 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 IM CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IM CoLtd has no effect on the direction of LG Electronics i.e., LG Electronics and IM CoLtd go up and down completely randomly.
Pair Corralation between LG Electronics and IM CoLtd
Assuming the 90 days trading horizon LG Electronics Pfd is expected to generate 0.46 times more return on investment than IM CoLtd. However, LG Electronics Pfd is 2.19 times less risky than IM CoLtd. It trades about -0.3 of its potential returns per unit of risk. IM CoLtd is currently generating about -0.28 per unit of risk. If you would invest 4,680,000 in LG Electronics Pfd on September 4, 2024 and sell it today you would lose (440,000) from holding LG Electronics Pfd or give up 9.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Electronics Pfd vs. IM CoLtd
Performance |
| Timeline |
| LG Electronics Pfd |
| IM CoLtd |
LG Electronics and IM CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and IM CoLtd
The main advantage of trading using opposite LG Electronics and IM CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, IM CoLtd 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 IM CoLtd will offset losses from the drop in IM CoLtd's long position.| LG Electronics vs. AptaBio Therapeutics | LG Electronics vs. Daewoo SBI SPAC | LG Electronics vs. Dream Security co | LG Electronics vs. Microfriend |
| IM CoLtd vs. Dongbang Transport Logistics | IM CoLtd vs. Home Center Holdings | IM CoLtd vs. Jinro Distillers Co | IM CoLtd vs. Daehan Synthetic Fiber |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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