Correlation Between PH Tech and LG Electronics
Can any of the company-specific risk be diversified away by investing in both PH Tech 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 PH Tech and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PH Tech Co and LG Electronics, you can compare the effects of market volatilities on PH Tech 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 PH Tech with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of PH Tech and LG Electronics.
Diversification Opportunities for PH Tech and LG Electronics
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 239890 and 066570 is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding PH Tech Co and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and PH Tech 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 PH Tech Co 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 PH Tech i.e., PH Tech and LG Electronics go up and down completely randomly.
Pair Corralation between PH Tech and LG Electronics
Assuming the 90 days trading horizon PH Tech Co is expected to generate 3.26 times more return on investment than LG Electronics. However, PH Tech is 3.26 times more volatile than LG Electronics. It trades about 0.21 of its potential returns per unit of risk. LG Electronics is currently generating about 0.08 per unit of risk. If you would invest 700,000 in PH Tech Co on August 29, 2024 and sell it today you would earn a total of 135,000 from holding PH Tech Co or generate 19.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PH Tech Co vs. LG Electronics
Performance |
| Timeline |
| PH Tech |
| LG Electronics |
PH Tech and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PH Tech and LG Electronics
The main advantage of trading using opposite PH Tech and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PH Tech 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.| PH Tech vs. SBI Investment KOREA | PH Tech vs. Sam Yang Foods | PH Tech vs. Hyundai Green Food | PH Tech vs. E Investment Development |
| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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