Correlation Between Nable Communications and LG Electronics
Can any of the company-specific risk be diversified away by investing in both Nable Communications and LG Electronics 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 Nable Communications and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nable Communications and LG Electronics Pfd, you can compare the effects of market volatilities on Nable Communications and LG Electronics 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 Nable Communications with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nable Communications and LG Electronics.
Diversification Opportunities for Nable Communications and LG Electronics
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nable and 066575 is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Nable Communications and LG Electronics Pfd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics Pfd and Nable Communications 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 Nable Communications are associated (or correlated) with LG Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics Pfd has no effect on the direction of Nable Communications i.e., Nable Communications and LG Electronics go up and down completely randomly.
Pair Corralation between Nable Communications and LG Electronics
Assuming the 90 days trading horizon Nable Communications is expected to under-perform the LG Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Nable Communications is 1.33 times less risky than LG Electronics. The stock trades about -0.03 of its potential returns per unit of risk. The LG Electronics Pfd is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 4,560,651 in LG Electronics Pfd on September 1, 2024 and sell it today you would lose (265,651) from holding LG Electronics Pfd or give up 5.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nable Communications vs. LG Electronics Pfd
Performance |
| Timeline |
| Nable Communications |
| LG Electronics Pfd |
Nable Communications and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nable Communications and LG Electronics
The main advantage of trading using opposite Nable Communications and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nable Communications position performs unexpectedly, LG Electronics 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 Electronics will offset losses from the drop in LG Electronics' long position.| Nable Communications vs. Lotte Non Life Insurance | Nable Communications vs. Korean Reinsurance Co | Nable Communications vs. Korea Information Communications | Nable Communications vs. DB Insurance Co |
| LG Electronics vs. AptaBio Therapeutics | LG Electronics vs. Daewoo SBI SPAC | LG Electronics vs. Dream Security co | LG Electronics vs. Microfriend |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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