Correlation Between Commercial Vehicle and LG Electronics
Can any of the company-specific risk be diversified away by investing in both Commercial Vehicle 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 Commercial Vehicle and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Vehicle Group and LG Electronics, you can compare the effects of market volatilities on Commercial Vehicle 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 Commercial Vehicle with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and LG Electronics.
Diversification Opportunities for Commercial Vehicle and LG Electronics
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Commercial and LGLG is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and Commercial Vehicle 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 Commercial Vehicle Group 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 Commercial Vehicle i.e., Commercial Vehicle and LG Electronics go up and down completely randomly.
Pair Corralation between Commercial Vehicle and LG Electronics
Assuming the 90 days trading horizon Commercial Vehicle Group is expected to under-perform the LG Electronics. In addition to that, Commercial Vehicle is 1.03 times more volatile than LG Electronics. It trades about -0.07 of its total potential returns per unit of risk. LG Electronics is currently generating about 0.0 per unit of volatility. If you would invest 1,607 in LG Electronics on October 26, 2024 and sell it today you would lose (347.00) from holding LG Electronics or give up 21.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Vehicle Group vs. LG Electronics
Performance |
| Timeline |
| Commercial Vehicle |
| LG Electronics |
Commercial Vehicle and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Vehicle and LG Electronics
The main advantage of trading using opposite Commercial Vehicle and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Vehicle 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.| Commercial Vehicle vs. MACOM Technology Solutions | Commercial Vehicle vs. Kingdee International Software | Commercial Vehicle vs. ecotel communication ag | Commercial Vehicle vs. HUTCHISON TELECOMM |
| LG Electronics vs. Marie Brizard Wine | LG Electronics vs. Urban Outfitters | LG Electronics vs. VIVA WINE GROUP | LG Electronics vs. VIRGIN WINES UK |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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