Correlation Between Kolon Plastics and LG Uplus
Can any of the company-specific risk be diversified away by investing in both Kolon Plastics and LG Uplus 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 Kolon Plastics and LG Uplus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kolon Plastics and LG Uplus, you can compare the effects of market volatilities on Kolon Plastics and LG Uplus 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 Kolon Plastics with a short position of LG Uplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kolon Plastics and LG Uplus.
Diversification Opportunities for Kolon Plastics and LG Uplus
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kolon and 032640 is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kolon Plastics and LG Uplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Uplus and Kolon Plastics 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 Kolon Plastics are associated (or correlated) with LG Uplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Uplus has no effect on the direction of Kolon Plastics i.e., Kolon Plastics and LG Uplus go up and down completely randomly.
Pair Corralation between Kolon Plastics and LG Uplus
Assuming the 90 days trading horizon Kolon Plastics is expected to generate 1.78 times more return on investment than LG Uplus. However, Kolon Plastics is 1.78 times more volatile than LG Uplus. It trades about 0.31 of its potential returns per unit of risk. LG Uplus is currently generating about -0.15 per unit of risk. If you would invest 478,000 in Kolon Plastics on October 9, 2024 and sell it today you would earn a total of 69,000 from holding Kolon Plastics or generate 14.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kolon Plastics vs. LG Uplus
Performance |
| Timeline |
| Kolon Plastics |
| LG Uplus |
Kolon Plastics and LG Uplus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kolon Plastics and LG Uplus
The main advantage of trading using opposite Kolon Plastics and LG Uplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kolon Plastics position performs unexpectedly, LG Uplus 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 Uplus will offset losses from the drop in LG Uplus' long position.| Kolon Plastics vs. Playgram Co | Kolon Plastics vs. Mgame Corp | Kolon Plastics vs. Display Tech Co | Kolon Plastics vs. Wonil Special Steel |
| LG Uplus vs. Woori Financial Group | LG Uplus vs. Lotte Non Life Insurance | LG Uplus vs. LG Display Co | LG Uplus vs. Daesung Hi 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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