Correlation Between KakaoBank Corp and LG Uplus
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp and LG Uplus 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 KakaoBank Corp and LG Uplus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and LG Uplus, you can compare the effects of market volatilities on KakaoBank Corp and LG Uplus 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 KakaoBank Corp with a short position of LG Uplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and LG Uplus.
Diversification Opportunities for KakaoBank Corp and LG Uplus
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KakaoBank and 032640 is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and LG Uplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Uplus and KakaoBank Corp 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 KakaoBank Corp are associated (or correlated) with LG Uplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Uplus has no effect on the direction of KakaoBank Corp i.e., KakaoBank Corp and LG Uplus go up and down completely randomly.
Pair Corralation between KakaoBank Corp and LG Uplus
Assuming the 90 days trading horizon KakaoBank Corp is expected to under-perform the LG Uplus. In addition to that, KakaoBank Corp is 1.69 times more volatile than LG Uplus. It trades about -0.13 of its total potential returns per unit of risk. LG Uplus is currently generating about -0.08 per unit of volatility. If you would invest 1,078,000 in LG Uplus on October 11, 2024 and sell it today you would lose (24,000) from holding LG Uplus or give up 2.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KakaoBank Corp vs. LG Uplus
Performance |
| Timeline |
| KakaoBank Corp |
| LG Uplus |
KakaoBank Corp and LG Uplus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KakaoBank Corp and LG Uplus
The main advantage of trading using opposite KakaoBank Corp and LG Uplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp position performs unexpectedly, LG Uplus 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 Uplus will offset losses from the drop in LG Uplus' long position.| KakaoBank Corp vs. Korea Alcohol Industrial | KakaoBank Corp vs. Sajo Seafood | KakaoBank Corp vs. Samji Electronics Co | KakaoBank Corp vs. Samwha Electronics Co |
| LG Uplus vs. Lotte Data Communication | LG Uplus vs. Woori Financial Group | LG Uplus vs. Dgb Financial | LG Uplus vs. KakaoBank 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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