Correlation Between Carriesoft and LG Electronics
Can any of the company-specific risk be diversified away by investing in both Carriesoft 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 Carriesoft and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carriesoft Co and LG Electronics, you can compare the effects of market volatilities on Carriesoft 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 Carriesoft with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carriesoft and LG Electronics.
Diversification Opportunities for Carriesoft and LG Electronics
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Carriesoft and 066570 is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Carriesoft Co and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and Carriesoft 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 Carriesoft 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 Carriesoft i.e., Carriesoft and LG Electronics go up and down completely randomly.
Pair Corralation between Carriesoft and LG Electronics
Assuming the 90 days trading horizon Carriesoft Co is expected to generate 2.24 times more return on investment than LG Electronics. However, Carriesoft is 2.24 times more volatile than LG Electronics. It trades about 0.01 of its potential returns per unit of risk. LG Electronics is currently generating about -0.04 per unit of risk. If you would invest 426,000 in Carriesoft Co on September 1, 2024 and sell it today you would lose (35,000) from holding Carriesoft Co or give up 8.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carriesoft Co vs. LG Electronics
Performance |
| Timeline |
| Carriesoft |
| LG Electronics |
Carriesoft and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carriesoft and LG Electronics
The main advantage of trading using opposite Carriesoft and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carriesoft 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.| Carriesoft vs. DONGKUK TED METAL | Carriesoft vs. Seoam Machinery Industry | Carriesoft vs. Tuksu Engineering ConstructionLtd | Carriesoft vs. Shinsegae Engineering Construction |
| 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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