Correlation Between UET United and LG Electronics
Can any of the company-specific risk be diversified away by investing in both UET United 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 UET United and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UET United Electronic and LG Electronics, you can compare the effects of market volatilities on UET United 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 UET United with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of UET United and LG Electronics.
Diversification Opportunities for UET United and LG Electronics
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between UET and LGLG is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding UET United Electronic and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and UET United 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 UET United Electronic 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 UET United i.e., UET United and LG Electronics go up and down completely randomly.
Pair Corralation between UET United and LG Electronics
Assuming the 90 days trading horizon UET United Electronic is expected to generate 3.39 times more return on investment than LG Electronics. However, UET United is 3.39 times more volatile than LG Electronics. It trades about 0.26 of its potential returns per unit of risk. LG Electronics is currently generating about -0.03 per unit of risk. If you would invest 80.00 in UET United Electronic on August 29, 2024 and sell it today you would earn a total of 28.00 from holding UET United Electronic or generate 35.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UET United Electronic vs. LG Electronics
Performance |
| Timeline |
| UET United Electronic |
| LG Electronics |
UET United and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UET United and LG Electronics
The main advantage of trading using opposite UET United and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UET United 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.| UET United vs. Cisco Systems | UET United vs. Telefonaktiebolaget LM Ericsson | UET United vs. Superior Plus Corp | UET United vs. NMI Holdings |
| LG Electronics vs. Apple Inc | LG Electronics vs. Apple Inc | LG Electronics vs. Apple Inc | LG Electronics vs. Apple 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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