Correlation Between MetaLabs and LG Electronics
Can any of the company-specific risk be diversified away by investing in both MetaLabs and LG Electronics 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 MetaLabs and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MetaLabs Co and LG Electronics, you can compare the effects of market volatilities on MetaLabs and LG Electronics 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 MetaLabs with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetaLabs and LG Electronics.
Diversification Opportunities for MetaLabs and LG Electronics
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MetaLabs and 066570 is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding MetaLabs Co and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and MetaLabs 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 MetaLabs Co are associated (or correlated) with LG Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics has no effect on the direction of MetaLabs i.e., MetaLabs and LG Electronics go up and down completely randomly.
Pair Corralation between MetaLabs and LG Electronics
Assuming the 90 days trading horizon MetaLabs Co is expected to generate 1.28 times more return on investment than LG Electronics. However, MetaLabs is 1.28 times more volatile than LG Electronics. It trades about -0.05 of its potential returns per unit of risk. LG Electronics is currently generating about -0.2 per unit of risk. If you would invest 134,600 in MetaLabs Co on September 24, 2024 and sell it today you would lose (4,600) from holding MetaLabs Co or give up 3.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MetaLabs Co vs. LG Electronics
Performance |
| Timeline |
| MetaLabs |
| LG Electronics |
MetaLabs and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetaLabs and LG Electronics
The main advantage of trading using opposite MetaLabs and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetaLabs position performs unexpectedly, LG Electronics 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 Electronics will offset losses from the drop in LG Electronics' long position.| MetaLabs vs. Woori Technology Investment | MetaLabs vs. Samsung Card Co | MetaLabs vs. Korea Real Estate | MetaLabs vs. CHOROKBAEM PANY Co |
| LG Electronics vs. MetaLabs Co | LG Electronics vs. Lotte Fine Chemical | LG Electronics vs. Heungkuk Metaltech CoLtd | LG Electronics vs. SH Energy Chemical |
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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