Correlation Between ChipsMedia and LG Chem
Can any of the company-specific risk be diversified away by investing in both ChipsMedia and LG Chem 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 ChipsMedia and LG Chem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChipsMedia and LG Chem, you can compare the effects of market volatilities on ChipsMedia and LG Chem 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 ChipsMedia with a short position of LG Chem. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChipsMedia and LG Chem.
Diversification Opportunities for ChipsMedia and LG Chem
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ChipsMedia and 051915 is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding ChipsMedia and LG Chem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chem and ChipsMedia 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 ChipsMedia are associated (or correlated) with LG Chem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chem has no effect on the direction of ChipsMedia i.e., ChipsMedia and LG Chem go up and down completely randomly.
Pair Corralation between ChipsMedia and LG Chem
Assuming the 90 days trading horizon ChipsMedia is expected to generate 2.17 times more return on investment than LG Chem. However, ChipsMedia is 2.17 times more volatile than LG Chem. It trades about 0.24 of its potential returns per unit of risk. LG Chem is currently generating about -0.51 per unit of risk. If you would invest 1,657,000 in ChipsMedia on November 7, 2024 and sell it today you would earn a total of 307,000 from holding ChipsMedia or generate 18.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
ChipsMedia vs. LG Chem
Performance |
| Timeline |
| ChipsMedia |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| LG Chem |
ChipsMedia and LG Chem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChipsMedia and LG Chem
The main advantage of trading using opposite ChipsMedia and LG Chem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChipsMedia position performs unexpectedly, LG Chem 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 Chem will offset losses from the drop in LG Chem's long position.| ChipsMedia vs. Jeju Bank | ChipsMedia vs. Spolytech Co | ChipsMedia vs. Hankukpackage Co | ChipsMedia vs. Dgb Financial |
| LG Chem vs. Hana Financial | LG Chem vs. SK Chemicals Co | LG Chem vs. Choil Aluminum | LG Chem vs. Genie Music |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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