Correlation Between Sangshin Electronics and LG Electronics
Can any of the company-specific risk be diversified away by investing in both Sangshin Electronics 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 Sangshin Electronics and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sangshin Electronics Co and LG Electronics, you can compare the effects of market volatilities on Sangshin Electronics 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 Sangshin Electronics with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sangshin Electronics and LG Electronics.
Diversification Opportunities for Sangshin Electronics and LG Electronics
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sangshin and 066570 is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sangshin Electronics Co and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and Sangshin Electronics 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 Sangshin Electronics 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 Sangshin Electronics i.e., Sangshin Electronics and LG Electronics go up and down completely randomly.
Pair Corralation between Sangshin Electronics and LG Electronics
Assuming the 90 days trading horizon Sangshin Electronics Co is expected to under-perform the LG Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Sangshin Electronics Co is 1.05 times less risky than LG Electronics. The stock trades about -0.09 of its potential returns per unit of risk. The LG Electronics is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 10,263,700 in LG Electronics on September 1, 2024 and sell it today you would lose (1,293,700) from holding LG Electronics or give up 12.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sangshin Electronics Co vs. LG Electronics
Performance |
| Timeline |
| Sangshin Electronics |
| LG Electronics |
Sangshin Electronics and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sangshin Electronics and LG Electronics
The main advantage of trading using opposite Sangshin Electronics and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sangshin Electronics 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.| Sangshin Electronics vs. Daejoo Electronic Materials | Sangshin Electronics vs. Parksystems Corp | Sangshin Electronics vs. BH Co | Sangshin Electronics vs. Partron Co |
| LG Electronics vs. Hyundai Green Food | LG Electronics vs. Seoul Food Industrial | LG Electronics vs. Haitai Confectionery Foods | LG Electronics vs. LS Materials |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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