Correlation Between LG Electronics and OLAM GROUP
Can any of the company-specific risk be diversified away by investing in both LG Electronics and OLAM GROUP 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 OLAM GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and OLAM GROUP LTD, you can compare the effects of market volatilities on LG Electronics and OLAM GROUP 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 OLAM GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and OLAM GROUP.
Diversification Opportunities for LG Electronics and OLAM GROUP
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LGLG and OLAM is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and OLAM GROUP LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OLAM GROUP LTD 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 OLAM GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OLAM GROUP LTD has no effect on the direction of LG Electronics i.e., LG Electronics and OLAM GROUP go up and down completely randomly.
Pair Corralation between LG Electronics and OLAM GROUP
Assuming the 90 days trading horizon LG Electronics is expected to generate 1.94 times more return on investment than OLAM GROUP. However, LG Electronics is 1.94 times more volatile than OLAM GROUP LTD. It trades about -0.03 of its potential returns per unit of risk. OLAM GROUP LTD is currently generating about -0.18 per unit of risk. If you would invest 1,320 in LG Electronics on October 25, 2024 and sell it today you would lose (30.00) from holding LG Electronics or give up 2.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Electronics vs. OLAM GROUP LTD
Performance |
| Timeline |
| LG Electronics |
| OLAM GROUP LTD |
LG Electronics and OLAM GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and OLAM GROUP
The main advantage of trading using opposite LG Electronics and OLAM GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, OLAM GROUP 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 OLAM GROUP will offset losses from the drop in OLAM GROUP's long position.| LG Electronics vs. TROPHY GAMES DEV | LG Electronics vs. Scientific Games | LG Electronics vs. Gaming and Leisure | LG Electronics vs. MOVIE GAMES SA |
| OLAM GROUP vs. Magic Software Enterprises | OLAM GROUP vs. Gol Intelligent Airlines | OLAM GROUP vs. Kingdee International Software | OLAM GROUP vs. AXWAY SOFTWARE EO |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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