Correlation Between MS Autotech and LG Innotek
Can any of the company-specific risk be diversified away by investing in both MS Autotech and LG Innotek 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 MS Autotech and LG Innotek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MS Autotech CoLtd and LG Innotek Co, you can compare the effects of market volatilities on MS Autotech and LG Innotek 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 MS Autotech with a short position of LG Innotek. Check out your portfolio center. Please also check ongoing floating volatility patterns of MS Autotech and LG Innotek.
Diversification Opportunities for MS Autotech and LG Innotek
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 123040 and 011070 is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding MS Autotech CoLtd and LG Innotek Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Innotek and MS Autotech 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 MS Autotech CoLtd are associated (or correlated) with LG Innotek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Innotek has no effect on the direction of MS Autotech i.e., MS Autotech and LG Innotek go up and down completely randomly.
Pair Corralation between MS Autotech and LG Innotek
Assuming the 90 days trading horizon MS Autotech CoLtd is expected to under-perform the LG Innotek. But the stock apears to be less risky and, when comparing its historical volatility, MS Autotech CoLtd is 1.37 times less risky than LG Innotek. The stock trades about -0.13 of its potential returns per unit of risk. The LG Innotek Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 24,600,000 in LG Innotek Co on September 4, 2024 and sell it today you would lose (8,290,000) from holding LG Innotek Co or give up 33.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MS Autotech CoLtd vs. LG Innotek Co
Performance |
| Timeline |
| MS Autotech CoLtd |
| LG Innotek |
MS Autotech and LG Innotek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MS Autotech and LG Innotek
The main advantage of trading using opposite MS Autotech and LG Innotek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MS Autotech position performs unexpectedly, LG Innotek 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 Innotek will offset losses from the drop in LG Innotek's long position.| MS Autotech vs. Korea Real Estate | MS Autotech vs. Busan Industrial Co | MS Autotech vs. UNISEM Co | MS Autotech vs. RPBio Inc |
| LG Innotek vs. Daejung Chemicals Metals | LG Innotek vs. DONGKUK TED METAL | LG Innotek vs. GS Retail Co | LG Innotek vs. Youngsin Metal Industrial |
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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