Correlation Between GRUPO CARSO-A1 and LG Electronics
Can any of the company-specific risk be diversified away by investing in both GRUPO CARSO-A1 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 GRUPO CARSO-A1 and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GRUPO CARSO A1 and LG Electronics, you can compare the effects of market volatilities on GRUPO CARSO-A1 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 GRUPO CARSO-A1 with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRUPO CARSO-A1 and LG Electronics.
Diversification Opportunities for GRUPO CARSO-A1 and LG Electronics
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GRUPO and LGLG is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding GRUPO CARSO A1 and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and GRUPO CARSO-A1 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 GRUPO CARSO A1 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 GRUPO CARSO-A1 i.e., GRUPO CARSO-A1 and LG Electronics go up and down completely randomly.
Pair Corralation between GRUPO CARSO-A1 and LG Electronics
Assuming the 90 days trading horizon GRUPO CARSO A1 is expected to generate 1.11 times more return on investment than LG Electronics. However, GRUPO CARSO-A1 is 1.11 times more volatile than LG Electronics. It trades about -0.06 of its potential returns per unit of risk. LG Electronics is currently generating about -0.1 per unit of risk. If you would invest 545.00 in GRUPO CARSO A1 on October 12, 2024 and sell it today you would lose (30.00) from holding GRUPO CARSO A1 or give up 5.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GRUPO CARSO A1 vs. LG Electronics
Performance |
| Timeline |
| GRUPO CARSO A1 |
| LG Electronics |
GRUPO CARSO-A1 and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GRUPO CARSO-A1 and LG Electronics
The main advantage of trading using opposite GRUPO CARSO-A1 and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GRUPO CARSO-A1 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.| GRUPO CARSO-A1 vs. Elmos Semiconductor SE | GRUPO CARSO-A1 vs. NH HOTEL GROUP | GRUPO CARSO-A1 vs. NXP Semiconductors NV | GRUPO CARSO-A1 vs. MELIA HOTELS |
| LG Electronics vs. GRUPO CARSO A1 | LG Electronics vs. Commercial Vehicle Group | LG Electronics vs. Hochschild Mining plc | LG Electronics vs. CONTAGIOUS GAMING INC |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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