Correlation Between Sangsin Energy and LG Chemicals
Can any of the company-specific risk be diversified away by investing in both Sangsin Energy 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 Sangsin Energy and LG Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sangsin Energy Display and LG Chemicals, you can compare the effects of market volatilities on Sangsin Energy 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 Sangsin Energy with a short position of LG Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sangsin Energy and LG Chemicals.
Diversification Opportunities for Sangsin Energy and LG Chemicals
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sangsin and 051910 is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sangsin Energy Display and LG Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chemicals and Sangsin Energy 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 Sangsin Energy Display 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 Sangsin Energy i.e., Sangsin Energy and LG Chemicals go up and down completely randomly.
Pair Corralation between Sangsin Energy and LG Chemicals
Assuming the 90 days trading horizon Sangsin Energy Display is expected to under-perform the LG Chemicals. In addition to that, Sangsin Energy is 1.31 times more volatile than LG Chemicals. It trades about -0.03 of its total potential returns per unit of risk. LG Chemicals is currently generating about -0.04 per unit of volatility. If you would invest 24,250,000 in LG Chemicals on November 3, 2024 and sell it today you would lose (500,000) from holding LG Chemicals or give up 2.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sangsin Energy Display vs. LG Chemicals
Performance |
| Timeline |
| Sangsin Energy Display |
| LG Chemicals |
Sangsin Energy and LG Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sangsin Energy and LG Chemicals
The main advantage of trading using opposite Sangsin Energy and LG Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sangsin Energy 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.| Sangsin Energy vs. Lotte Non Life Insurance | Sangsin Energy vs. PLAYWITH | Sangsin Energy vs. DataSolution | Sangsin Energy vs. Samsung Life Insurance |
| LG Chemicals vs. Neungyule Education | LG Chemicals vs. ECSTELECOM Co | LG Chemicals vs. Samsung Publishing Co | LG Chemicals vs. Korea Information Communications |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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