Correlation Between Techwing and LG Household
Can any of the company-specific risk be diversified away by investing in both Techwing and LG Household 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 Techwing and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Techwing and LG Household Healthcare, you can compare the effects of market volatilities on Techwing and LG Household 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 Techwing with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Techwing and LG Household.
Diversification Opportunities for Techwing and LG Household
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Techwing and 051905 is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Techwing and LG Household Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Household Healthcare and Techwing 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 Techwing are associated (or correlated) with LG Household. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Household Healthcare has no effect on the direction of Techwing i.e., Techwing and LG Household go up and down completely randomly.
Pair Corralation between Techwing and LG Household
Assuming the 90 days trading horizon Techwing is expected to generate 2.09 times more return on investment than LG Household. However, Techwing is 2.09 times more volatile than LG Household Healthcare. It trades about 0.11 of its potential returns per unit of risk. LG Household Healthcare is currently generating about -0.08 per unit of risk. If you would invest 656,216 in Techwing on November 7, 2024 and sell it today you would earn a total of 3,443,784 from holding Techwing or generate 524.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Techwing vs. LG Household Healthcare
Performance |
| Timeline |
| Techwing |
| LG Household Healthcare |
Techwing and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Techwing and LG Household
The main advantage of trading using opposite Techwing and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Techwing position performs unexpectedly, LG Household 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 Household will offset losses from the drop in LG Household's long position.| Techwing vs. Lotte Chilsung Beverage | Techwing vs. Daechang Steel Co | Techwing vs. Daehan Steel | Techwing vs. ABOV Semiconductor Co |
| LG Household vs. Formetal Co | LG Household vs. Songwon Industrial Co | LG Household vs. Taegu Broadcasting | LG Household vs. Hanmi Semiconductor Co |
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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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