Correlation Between DAX Index and LG Electronics
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By analyzing existing cross correlation between DAX Index and LG Electronics, you can compare the effects of market volatilities on DAX Index 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 DAX Index with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and LG Electronics.
Diversification Opportunities for DAX Index and LG Electronics
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DAX and LGLG is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and DAX Index 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 DAX Index 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 DAX Index i.e., DAX Index and LG Electronics go up and down completely randomly.
Pair Corralation between DAX Index and LG Electronics
Assuming the 90 days trading horizon DAX Index is expected to under-perform the LG Electronics. But the index apears to be less risky and, when comparing its historical volatility, DAX Index is 1.81 times less risky than LG Electronics. The index trades about -0.05 of its potential returns per unit of risk. The LG Electronics is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,470 in LG Electronics on August 28, 2024 and sell it today you would lose (20.00) from holding LG Electronics or give up 1.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. LG Electronics
Performance |
| Timeline |
DAX Index and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
LG Electronics
Pair trading matchups for LG Electronics
Pair Trading with DAX Index and LG Electronics
The main advantage of trading using opposite DAX Index and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index 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.| DAX Index vs. ELMOS SEMICONDUCTOR | DAX Index vs. ALTAIR RES INC | DAX Index vs. Fair Isaac Corp | DAX Index vs. Taiwan Semiconductor Manufacturing |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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