Correlation Between Innowireless and LG Chemicals
Can any of the company-specific risk be diversified away by investing in both Innowireless and LG Chemicals 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 Innowireless and LG Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innowireless Co and LG Chemicals, you can compare the effects of market volatilities on Innowireless and LG Chemicals 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 Innowireless with a short position of LG Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innowireless and LG Chemicals.
Diversification Opportunities for Innowireless and LG Chemicals
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Innowireless and 051910 is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Innowireless Co and LG Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chemicals and Innowireless 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 Innowireless Co are associated (or correlated) with LG Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chemicals has no effect on the direction of Innowireless i.e., Innowireless and LG Chemicals go up and down completely randomly.
Pair Corralation between Innowireless and LG Chemicals
Assuming the 90 days trading horizon Innowireless Co is expected to under-perform the LG Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, Innowireless Co is 1.61 times less risky than LG Chemicals. The stock trades about -0.15 of its potential returns per unit of risk. The LG Chemicals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 23,750,000 in LG Chemicals on December 1, 2024 and sell it today you would lose (300,000) from holding LG Chemicals or give up 1.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innowireless Co vs. LG Chemicals
Performance |
| Timeline |
| Innowireless |
| LG Chemicals |
Innowireless and LG Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innowireless and LG Chemicals
The main advantage of trading using opposite Innowireless and LG Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innowireless position performs unexpectedly, LG Chemicals 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 Chemicals will offset losses from the drop in LG Chemicals' long position.| Innowireless vs. Daiyang Metal Co | Innowireless vs. Tuksu Engineering ConstructionLtd | Innowireless vs. Kakao Games Corp | Innowireless vs. Shinhan Inverse Copper |
| LG Chemicals vs. PJ Metal Co | LG Chemicals vs. Automobile Pc | LG Chemicals vs. Lake Materials Co | LG Chemicals vs. INNOX 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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