Correlation Between Itcen and LG Household
Can any of the company-specific risk be diversified away by investing in both Itcen 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 Itcen and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itcen Co and LG Household Healthcare, you can compare the effects of market volatilities on Itcen 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 Itcen with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itcen and LG Household.
Diversification Opportunities for Itcen and LG Household
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Itcen and 051905 is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Itcen Co 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 Itcen 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 Itcen Co 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 Itcen i.e., Itcen and LG Household go up and down completely randomly.
Pair Corralation between Itcen and LG Household
Assuming the 90 days trading horizon Itcen Co is expected to under-perform the LG Household. In addition to that, Itcen is 7.32 times more volatile than LG Household Healthcare. It trades about -0.09 of its total potential returns per unit of risk. LG Household Healthcare is currently generating about -0.48 per unit of volatility. If you would invest 14,070,000 in LG Household Healthcare on October 14, 2024 and sell it today you would lose (630,000) from holding LG Household Healthcare or give up 4.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Itcen Co vs. LG Household Healthcare
Performance |
| Timeline |
| Itcen |
| LG Household Healthcare |
Itcen and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itcen and LG Household
The main advantage of trading using opposite Itcen and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itcen 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.| Itcen vs. Pan Entertainment Co | Itcen vs. SAMG Entertainment Co | Itcen vs. Alton Sports CoLtd | Itcen vs. Daou Data Corp |
| LG Household vs. Cheryong Industrial CoLtd | LG Household vs. Heungkuk Metaltech CoLtd | LG Household vs. Shinil Industrial Co | LG Household vs. Mgame Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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