Correlation Between UTI and LG Electronics
Can any of the company-specific risk be diversified away by investing in both UTI 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 UTI and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UTI Inc and LG Electronics, you can compare the effects of market volatilities on UTI 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 UTI with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of UTI and LG Electronics.
Diversification Opportunities for UTI and LG Electronics
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between UTI and 066570 is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding UTI Inc and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and UTI 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 UTI Inc 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 has no effect on the direction of UTI i.e., UTI and LG Electronics go up and down completely randomly.
Pair Corralation between UTI and LG Electronics
Assuming the 90 days trading horizon UTI Inc is expected to generate 1.39 times more return on investment than LG Electronics. However, UTI is 1.39 times more volatile than LG Electronics. It trades about 0.28 of its potential returns per unit of risk. LG Electronics is currently generating about -0.14 per unit of risk. If you would invest 2,105,000 in UTI Inc on December 1, 2024 and sell it today you would earn a total of 375,000 from holding UTI Inc or generate 17.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UTI Inc vs. LG Electronics
Performance |
| Timeline |
| UTI Inc |
| LG Electronics |
UTI and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UTI and LG Electronics
The main advantage of trading using opposite UTI and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UTI 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.| UTI vs. INFINITT Healthcare Co | UTI vs. Chorokbaem Healthcare Co | UTI vs. LG Household Healthcare | UTI vs. Seoul Food Industrial |
| LG Electronics vs. Formetal Co | LG Electronics vs. Daiyang Metal Co | LG Electronics vs. Heungkuk Metaltech CoLtd | LG Electronics vs. DONGKUK TED METAL |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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