Correlation Between Lindeman Asia and LG Electronics
Can any of the company-specific risk be diversified away by investing in both Lindeman Asia 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 Lindeman Asia and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lindeman Asia Investment and LG Electronics, you can compare the effects of market volatilities on Lindeman Asia 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 Lindeman Asia with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindeman Asia and LG Electronics.
Diversification Opportunities for Lindeman Asia and LG Electronics
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lindeman and 066570 is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lindeman Asia Investment and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and Lindeman Asia 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 Lindeman Asia Investment 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 Lindeman Asia i.e., Lindeman Asia and LG Electronics go up and down completely randomly.
Pair Corralation between Lindeman Asia and LG Electronics
Assuming the 90 days trading horizon Lindeman Asia Investment is expected to under-perform the LG Electronics. In addition to that, Lindeman Asia is 2.05 times more volatile than LG Electronics. It trades about -0.03 of its total potential returns per unit of risk. LG Electronics is currently generating about -0.04 per unit of volatility. If you would invest 12,403,600 in LG Electronics on September 4, 2024 and sell it today you would lose (3,583,600) from holding LG Electronics or give up 28.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lindeman Asia Investment vs. LG Electronics
Performance |
| Timeline |
| Lindeman Asia Investment |
| LG Electronics |
Lindeman Asia and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindeman Asia and LG Electronics
The main advantage of trading using opposite Lindeman Asia and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindeman Asia 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.| Lindeman Asia vs. Nh Investment And | Lindeman Asia vs. Hanwha InvestmentSecurities Co | Lindeman Asia vs. YeSUN Tech CoLtd |
| LG Electronics vs. E Investment Development | LG Electronics vs. Samsung Life Insurance | LG Electronics vs. Alton Sports CoLtd | LG Electronics vs. Sangsangin Investment Securities |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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