Correlation Between LG Electronics and CAL MAINE
Can any of the company-specific risk be diversified away by investing in both LG Electronics and CAL MAINE 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 CAL MAINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and CAL MAINE FOODS, you can compare the effects of market volatilities on LG Electronics and CAL MAINE 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 CAL MAINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and CAL MAINE.
Diversification Opportunities for LG Electronics and CAL MAINE
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LGLG and CAL is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and CAL MAINE FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAL MAINE FOODS 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 CAL MAINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAL MAINE FOODS has no effect on the direction of LG Electronics i.e., LG Electronics and CAL MAINE go up and down completely randomly.
Pair Corralation between LG Electronics and CAL MAINE
Assuming the 90 days trading horizon LG Electronics is expected to under-perform the CAL MAINE. But the stock apears to be less risky and, when comparing its historical volatility, LG Electronics is 1.15 times less risky than CAL MAINE. The stock trades about -0.04 of its potential returns per unit of risk. The CAL MAINE FOODS is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 10,201 in CAL MAINE FOODS on November 6, 2024 and sell it today you would earn a total of 879.00 from holding CAL MAINE FOODS or generate 8.62% 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. CAL MAINE FOODS
Performance |
| Timeline |
| LG Electronics |
| CAL MAINE FOODS |
LG Electronics and CAL MAINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and CAL MAINE
The main advantage of trading using opposite LG Electronics and CAL MAINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, CAL MAINE 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 CAL MAINE will offset losses from the drop in CAL MAINE's long position.| LG Electronics vs. PLAYTIKA HOLDING DL 01 | LG Electronics vs. Goosehead Insurance | LG Electronics vs. PLAY2CHILL SA ZY | LG Electronics vs. InPlay Oil Corp |
| CAL MAINE vs. ELMOS SEMICONDUCTOR | CAL MAINE vs. Magnachip Semiconductor | CAL MAINE vs. Elmos Semiconductor SE | CAL MAINE vs. Nordic Semiconductor ASA |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |