Correlation Between Pyung Hwa and LG Household
Can any of the company-specific risk be diversified away by investing in both Pyung Hwa 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 Pyung Hwa and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pyung Hwa Industrial and LG Household Healthcare, you can compare the effects of market volatilities on Pyung Hwa 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 Pyung Hwa with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pyung Hwa and LG Household.
Diversification Opportunities for Pyung Hwa and LG Household
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pyung and 051900 is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Pyung Hwa Industrial 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 Pyung Hwa 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 Pyung Hwa Industrial 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 Pyung Hwa i.e., Pyung Hwa and LG Household go up and down completely randomly.
Pair Corralation between Pyung Hwa and LG Household
Assuming the 90 days trading horizon Pyung Hwa is expected to generate 4.55 times less return on investment than LG Household. In addition to that, Pyung Hwa is 2.79 times more volatile than LG Household Healthcare. It trades about 0.01 of its total potential returns per unit of risk. LG Household Healthcare is currently generating about 0.11 per unit of volatility. If you would invest 30,700,000 in LG Household Healthcare on November 28, 2024 and sell it today you would earn a total of 1,350,000 from holding LG Household Healthcare or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pyung Hwa Industrial vs. LG Household Healthcare
Performance |
| Timeline |
| Pyung Hwa Industrial |
| LG Household Healthcare |
Pyung Hwa and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pyung Hwa and LG Household
The main advantage of trading using opposite Pyung Hwa and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pyung Hwa 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.| Pyung Hwa vs. AptaBio Therapeutics | Pyung Hwa vs. Daewoo SBI SPAC | Pyung Hwa vs. Dream Security co | Pyung Hwa vs. Microfriend |
| LG Household vs. Duksan Hi Metal | LG Household vs. Hana Financial | LG Household vs. Dongil Metal Co | LG Household vs. Kukil Metal 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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