Correlation Between Wireless Power and LG Chemicals
Can any of the company-specific risk be diversified away by investing in both Wireless Power and LG Chemicals 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 Wireless Power and LG Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wireless Power Amplifier and LG Chemicals, you can compare the effects of market volatilities on Wireless Power and LG Chemicals 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 Wireless Power with a short position of LG Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wireless Power and LG Chemicals.
Diversification Opportunities for Wireless Power and LG Chemicals
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wireless and 051910 is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Wireless Power Amplifier and LG Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chemicals and Wireless Power 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 Wireless Power Amplifier are associated (or correlated) with LG Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chemicals has no effect on the direction of Wireless Power i.e., Wireless Power and LG Chemicals go up and down completely randomly.
Pair Corralation between Wireless Power and LG Chemicals
Assuming the 90 days trading horizon Wireless Power Amplifier is expected to generate 1.21 times more return on investment than LG Chemicals. However, Wireless Power is 1.21 times more volatile than LG Chemicals. It trades about -0.03 of its potential returns per unit of risk. LG Chemicals is currently generating about -0.08 per unit of risk. If you would invest 290,000 in Wireless Power Amplifier on September 4, 2024 and sell it today you would lose (71,500) from holding Wireless Power Amplifier or give up 24.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wireless Power Amplifier vs. LG Chemicals
Performance |
| Timeline |
| Wireless Power Amplifier |
| LG Chemicals |
Wireless Power and LG Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wireless Power and LG Chemicals
The main advantage of trading using opposite Wireless Power and LG Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wireless Power position performs unexpectedly, LG Chemicals 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 Chemicals will offset losses from the drop in LG Chemicals' long position.| Wireless Power vs. Daejoo Electronic Materials | Wireless Power vs. Parksystems Corp | Wireless Power vs. BH Co | Wireless Power vs. Partron Co |
| LG Chemicals vs. POSCO Holdings | LG Chemicals vs. Lotte Chemical Corp | LG Chemicals vs. Hyundai Steel | LG Chemicals vs. Ecopro Co |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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