Correlation Between TT Electronics and LG Electronics
Can any of the company-specific risk be diversified away by investing in both TT Electronics 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 TT Electronics and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TT Electronics PLC and LG Electronics, you can compare the effects of market volatilities on TT Electronics 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 TT Electronics with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of TT Electronics and LG Electronics.
Diversification Opportunities for TT Electronics and LG Electronics
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 7TT and LGLG is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding TT Electronics PLC and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and TT Electronics 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 TT Electronics PLC 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 TT Electronics i.e., TT Electronics and LG Electronics go up and down completely randomly.
Pair Corralation between TT Electronics and LG Electronics
Assuming the 90 days trading horizon TT Electronics PLC is expected to under-perform the LG Electronics. In addition to that, TT Electronics is 1.54 times more volatile than LG Electronics. It trades about -0.02 of its total potential returns per unit of risk. LG Electronics is currently generating about -0.01 per unit of volatility. If you would invest 1,492 in LG Electronics on October 10, 2024 and sell it today you would lose (182.00) from holding LG Electronics or give up 12.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TT Electronics PLC vs. LG Electronics
Performance |
| Timeline |
| TT Electronics PLC |
| LG Electronics |
TT Electronics and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TT Electronics and LG Electronics
The main advantage of trading using opposite TT Electronics and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TT Electronics 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.| TT Electronics vs. BioNTech SE | TT Electronics vs. ORMAT TECHNOLOGIES | TT Electronics vs. Motorcar Parts of | TT Electronics vs. Digilife Technologies Limited |
| LG Electronics vs. USU Software AG | LG Electronics vs. FORMPIPE SOFTWARE AB | LG Electronics vs. INTERSHOP Communications Aktiengesellschaft | LG Electronics vs. GBS Software AG |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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