Correlation Between Xavis and LG Innotek
Can any of the company-specific risk be diversified away by investing in both Xavis and LG Innotek 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 Xavis and LG Innotek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xavis Co and LG Innotek Co, you can compare the effects of market volatilities on Xavis and LG Innotek 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 Xavis with a short position of LG Innotek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xavis and LG Innotek.
Diversification Opportunities for Xavis and LG Innotek
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xavis and 011070 is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Xavis Co and LG Innotek Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Innotek and Xavis 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 Xavis Co are associated (or correlated) with LG Innotek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Innotek has no effect on the direction of Xavis i.e., Xavis and LG Innotek go up and down completely randomly.
Pair Corralation between Xavis and LG Innotek
Assuming the 90 days trading horizon Xavis Co is expected to generate 1.85 times more return on investment than LG Innotek. However, Xavis is 1.85 times more volatile than LG Innotek Co. It trades about 0.02 of its potential returns per unit of risk. LG Innotek Co is currently generating about -0.03 per unit of risk. If you would invest 157,558 in Xavis Co on September 1, 2024 and sell it today you would lose (15,758) from holding Xavis Co or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xavis Co vs. LG Innotek Co
Performance |
| Timeline |
| Xavis |
| LG Innotek |
Xavis and LG Innotek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xavis and LG Innotek
The main advantage of trading using opposite Xavis and LG Innotek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xavis position performs unexpectedly, LG Innotek 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 Innotek will offset losses from the drop in LG Innotek's long position.The idea behind Xavis Co and LG Innotek Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| LG Innotek vs. DONGKUK TED METAL | LG Innotek vs. Hanjoo Light Metal | LG Innotek vs. Daedong Metals Co | LG Innotek vs. JYP Entertainment Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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