Correlation Between Fukuyama Transporting and LG Electronics
Can any of the company-specific risk be diversified away by investing in both Fukuyama Transporting 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 Fukuyama Transporting and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fukuyama Transporting Co and LG Electronics, you can compare the effects of market volatilities on Fukuyama Transporting 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 Fukuyama Transporting with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fukuyama Transporting and LG Electronics.
Diversification Opportunities for Fukuyama Transporting and LG Electronics
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fukuyama and LGLG is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Fukuyama Transporting Co and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and Fukuyama Transporting 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 Fukuyama Transporting Co 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 Fukuyama Transporting i.e., Fukuyama Transporting and LG Electronics go up and down completely randomly.
Pair Corralation between Fukuyama Transporting and LG Electronics
Assuming the 90 days horizon Fukuyama Transporting Co is expected to generate 0.54 times more return on investment than LG Electronics. However, Fukuyama Transporting Co is 1.85 times less risky than LG Electronics. It trades about 0.01 of its potential returns per unit of risk. LG Electronics is currently generating about -0.24 per unit of risk. If you would invest 2,240 in Fukuyama Transporting Co on November 1, 2024 and sell it today you would earn a total of 0.00 from holding Fukuyama Transporting Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fukuyama Transporting Co vs. LG Electronics
Performance |
| Timeline |
| Fukuyama Transporting |
| LG Electronics |
Fukuyama Transporting and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fukuyama Transporting and LG Electronics
The main advantage of trading using opposite Fukuyama Transporting and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fukuyama Transporting 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.| Fukuyama Transporting vs. RCI Hospitality Holdings | Fukuyama Transporting vs. Planet Fitness | Fukuyama Transporting vs. MPH Health Care | Fukuyama Transporting vs. H2O Retailing |
| LG Electronics vs. Fukuyama Transporting Co | LG Electronics vs. CVS Health | LG Electronics vs. CSSC Offshore Marine | LG Electronics vs. US Physical Therapy |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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