Correlation Between LG Electronics and DAIDO METAL
Can any of the company-specific risk be diversified away by investing in both LG Electronics and DAIDO METAL 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 LG Electronics and DAIDO METAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and DAIDO METAL TD, you can compare the effects of market volatilities on LG Electronics and DAIDO METAL 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 LG Electronics with a short position of DAIDO METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and DAIDO METAL.
Diversification Opportunities for LG Electronics and DAIDO METAL
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LGLG and DAIDO is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and DAIDO METAL TD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIDO METAL TD and LG 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 LG Electronics are associated (or correlated) with DAIDO METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIDO METAL TD has no effect on the direction of LG Electronics i.e., LG Electronics and DAIDO METAL go up and down completely randomly.
Pair Corralation between LG Electronics and DAIDO METAL
Assuming the 90 days trading horizon LG Electronics is expected to under-perform the DAIDO METAL. In addition to that, LG Electronics is 1.33 times more volatile than DAIDO METAL TD. It trades about -0.03 of its total potential returns per unit of risk. DAIDO METAL TD is currently generating about 0.02 per unit of volatility. If you would invest 284.00 in DAIDO METAL TD on November 1, 2024 and sell it today you would earn a total of 8.00 from holding DAIDO METAL TD or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Electronics vs. DAIDO METAL TD
Performance |
| Timeline |
| LG Electronics |
| DAIDO METAL TD |
LG Electronics and DAIDO METAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and DAIDO METAL
The main advantage of trading using opposite LG Electronics and DAIDO METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, DAIDO METAL 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 DAIDO METAL will offset losses from the drop in DAIDO METAL's long position.| LG Electronics vs. Fukuyama Transporting Co | LG Electronics vs. CVS Health | LG Electronics vs. CSSC Offshore Marine | LG Electronics vs. US Physical Therapy |
| DAIDO METAL vs. Broadwind | DAIDO METAL vs. Citic Telecom International | DAIDO METAL vs. BII Railway Transportation | DAIDO METAL vs. China Communications Services |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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