Correlation Between LG Electronics and Nable Communications
Can any of the company-specific risk be diversified away by investing in both LG Electronics and Nable Communications 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 Nable Communications 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 Nable Communications, you can compare the effects of market volatilities on LG Electronics and Nable Communications 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 Nable Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and Nable Communications.
Diversification Opportunities for LG Electronics and Nable Communications
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 066575 and Nable is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics Pfd and Nable Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nable Communications 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 Nable Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nable Communications has no effect on the direction of LG Electronics i.e., LG Electronics and Nable Communications go up and down completely randomly.
Pair Corralation between LG Electronics and Nable Communications
Assuming the 90 days trading horizon LG Electronics Pfd is expected to under-perform the Nable Communications. But the stock apears to be less risky and, when comparing its historical volatility, LG Electronics Pfd is 1.09 times less risky than Nable Communications. The stock trades about -0.13 of its potential returns per unit of risk. The Nable Communications is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 641,000 in Nable Communications on November 27, 2024 and sell it today you would earn a total of 51,000 from holding Nable Communications or generate 7.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Electronics Pfd vs. Nable Communications
Performance |
| Timeline |
| LG Electronics Pfd |
| Nable Communications |
LG Electronics and Nable Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and Nable Communications
The main advantage of trading using opposite LG Electronics and Nable Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, Nable Communications 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 Nable Communications will offset losses from the drop in Nable Communications' 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 |
| Nable Communications vs. Union Materials Corp | Nable Communications vs. Hannong Chemicals | Nable Communications vs. LG Household Healthcare | Nable Communications vs. Hyosung Advanced Materials |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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