Correlation Between LS Materials and Daewoo Electronic
Can any of the company-specific risk be diversified away by investing in both LS Materials and Daewoo Electronic 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 LS Materials and Daewoo Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LS Materials and Daewoo Electronic Components, you can compare the effects of market volatilities on LS Materials and Daewoo Electronic 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 LS Materials with a short position of Daewoo Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of LS Materials and Daewoo Electronic.
Diversification Opportunities for LS Materials and Daewoo Electronic
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 417200 and Daewoo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding LS Materials and Daewoo Electronic Components in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo Electronic and LS Materials 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 LS Materials are associated (or correlated) with Daewoo Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo Electronic has no effect on the direction of LS Materials i.e., LS Materials and Daewoo Electronic go up and down completely randomly.
Pair Corralation between LS Materials and Daewoo Electronic
Assuming the 90 days trading horizon LS Materials is expected to generate 3.87 times more return on investment than Daewoo Electronic. However, LS Materials is 3.87 times more volatile than Daewoo Electronic Components. It trades about 0.23 of its potential returns per unit of risk. Daewoo Electronic Components is currently generating about -0.08 per unit of risk. If you would invest 1,111,000 in LS Materials on October 12, 2024 and sell it today you would earn a total of 136,000 from holding LS Materials or generate 12.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LS Materials vs. Daewoo Electronic Components
Performance |
| Timeline |
| LS Materials |
| Daewoo Electronic |
LS Materials and Daewoo Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LS Materials and Daewoo Electronic
The main advantage of trading using opposite LS Materials and Daewoo Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LS Materials position performs unexpectedly, Daewoo Electronic 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 Daewoo Electronic will offset losses from the drop in Daewoo Electronic's long position.| LS Materials vs. Samsung Electronics Co | LS Materials vs. Samsung Electronics Co | LS Materials vs. LG Energy Solution | LS Materials vs. SK Hynix |
| Daewoo Electronic vs. Hwangkum Steel Technology | Daewoo Electronic vs. SEOWONINTECHCoLtd | Daewoo Electronic vs. LS Materials | Daewoo Electronic vs. Sungchang Autotech 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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