Correlation Between Hyundai Green and LG Electronics

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Hyundai Green 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 Hyundai Green and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Green Food and LG Electronics, you can compare the effects of market volatilities on Hyundai Green 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 Hyundai Green with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Green and LG Electronics.

Diversification Opportunities for Hyundai Green and LG Electronics

-0.51
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Hyundai and 066570 is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Green Food and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and Hyundai Green 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 Hyundai Green Food 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 Hyundai Green i.e., Hyundai Green and LG Electronics go up and down completely randomly.

Pair Corralation between Hyundai Green and LG Electronics

Assuming the 90 days trading horizon Hyundai Green Food is expected to generate 0.59 times more return on investment than LG Electronics. However, Hyundai Green Food is 1.69 times less risky than LG Electronics. It trades about 0.06 of its potential returns per unit of risk. LG Electronics is currently generating about 0.0 per unit of risk. If you would invest  1,114,000  in Hyundai Green Food on August 25, 2024 and sell it today you would earn a total of  199,000  from holding Hyundai Green Food or generate 17.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Hyundai Green Food  vs.  LG Electronics

 Performance 
       Timeline  
Hyundai Green Food 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Hyundai Green Food are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hyundai Green may actually be approaching a critical reversion point that can send shares even higher in December 2024.
LG Electronics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days LG Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LG Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hyundai Green and LG Electronics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hyundai Green and LG Electronics

The main advantage of trading using opposite Hyundai Green and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Green 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.
The idea behind Hyundai Green Food and LG Electronics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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..

Other Complementary Tools

Portfolio Comparator
Compare the composition, asset allocations and performance of any two portfolios in your account
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios