Correlation Between LTC CoLtd and LG Chemicals
Can any of the company-specific risk be diversified away by investing in both LTC CoLtd and LG Chemicals 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 LTC CoLtd and LG Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LTC CoLtd and LG Chemicals, you can compare the effects of market volatilities on LTC CoLtd and LG Chemicals 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 LTC CoLtd with a short position of LG Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of LTC CoLtd and LG Chemicals.
Diversification Opportunities for LTC CoLtd and LG Chemicals
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LTC and 051910 is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding LTC CoLtd and LG Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chemicals and LTC CoLtd 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 LTC CoLtd are associated (or correlated) with LG Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chemicals has no effect on the direction of LTC CoLtd i.e., LTC CoLtd and LG Chemicals go up and down completely randomly.
Pair Corralation between LTC CoLtd and LG Chemicals
Assuming the 90 days trading horizon LTC CoLtd is expected to under-perform the LG Chemicals. In addition to that, LTC CoLtd is 1.23 times more volatile than LG Chemicals. It trades about -0.1 of its total potential returns per unit of risk. LG Chemicals is currently generating about -0.06 per unit of volatility. If you would invest 36,100,000 in LG Chemicals on September 2, 2024 and sell it today you would lose (7,700,000) from holding LG Chemicals or give up 21.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LTC CoLtd vs. LG Chemicals
Performance |
| Timeline |
| LTC CoLtd |
| LG Chemicals |
LTC CoLtd and LG Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LTC CoLtd and LG Chemicals
The main advantage of trading using opposite LTC CoLtd and LG Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LTC CoLtd position performs unexpectedly, LG Chemicals 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 Chemicals will offset losses from the drop in LG Chemicals' long position.| LTC CoLtd vs. InfoBank | LTC CoLtd vs. Lotte Non Life Insurance | LTC CoLtd vs. Hwangkum Steel Technology | LTC CoLtd vs. Eugene Technology CoLtd |
| LG Chemicals vs. POSCO Holdings | LG Chemicals vs. Hanwha Solutions | LG Chemicals vs. Hyundai Steel | LG Chemicals vs. Ecopro 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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