Correlation Between Daesung Hi and LG Household
Can any of the company-specific risk be diversified away by investing in both Daesung Hi 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 Daesung Hi and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daesung Hi Tech Co and LG Household Healthcare, you can compare the effects of market volatilities on Daesung Hi 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 Daesung Hi with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daesung Hi and LG Household.
Diversification Opportunities for Daesung Hi and LG Household
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daesung and 051900 is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Hi Tech 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 Daesung Hi 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 Daesung Hi Tech 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 Daesung Hi i.e., Daesung Hi and LG Household go up and down completely randomly.
Pair Corralation between Daesung Hi and LG Household
Assuming the 90 days trading horizon Daesung Hi Tech Co is expected to under-perform the LG Household. But the stock apears to be less risky and, when comparing its historical volatility, Daesung Hi Tech Co is 1.16 times less risky than LG Household. The stock trades about -0.26 of its potential returns per unit of risk. The LG Household Healthcare is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 37,900,000 in LG Household Healthcare on August 31, 2024 and sell it today you would lose (5,900,000) from holding LG Household Healthcare or give up 15.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daesung Hi Tech Co vs. LG Household Healthcare
Performance |
| Timeline |
| Daesung Hi Tech |
| LG Household Healthcare |
Daesung Hi and LG Household Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daesung Hi and LG Household
The main advantage of trading using opposite Daesung Hi and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daesung Hi 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.| Daesung Hi vs. Samsung Electronics Co | Daesung Hi vs. Samsung Electronics Co | Daesung Hi vs. LG Energy Solution | Daesung Hi vs. SK Hynix |
| LG Household vs. Korea Real Estate | LG Household vs. Korea Ratings Co | LG Household vs. IQuest Co | LG Household vs. Wonbang Tech Co |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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