Correlation Between LG Electronics and MUTUIONLINE
Can any of the company-specific risk be diversified away by investing in both LG Electronics and MUTUIONLINE 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 MUTUIONLINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and MUTUIONLINE, you can compare the effects of market volatilities on LG Electronics and MUTUIONLINE 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 MUTUIONLINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and MUTUIONLINE.
Diversification Opportunities for LG Electronics and MUTUIONLINE
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LGLG and MUTUIONLINE is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and MUTUIONLINE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MUTUIONLINE 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 MUTUIONLINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MUTUIONLINE has no effect on the direction of LG Electronics i.e., LG Electronics and MUTUIONLINE go up and down completely randomly.
Pair Corralation between LG Electronics and MUTUIONLINE
Assuming the 90 days trading horizon LG Electronics is expected to generate 63.1 times less return on investment than MUTUIONLINE. But when comparing it to its historical volatility, LG Electronics is 1.0 times less risky than MUTUIONLINE. It trades about 0.0 of its potential returns per unit of risk. MUTUIONLINE is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,925 in MUTUIONLINE on September 2, 2024 and sell it today you would earn a total of 945.00 from holding MUTUIONLINE or generate 32.31% 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. MUTUIONLINE
Performance |
| Timeline |
| LG Electronics |
| MUTUIONLINE |
LG Electronics and MUTUIONLINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and MUTUIONLINE
The main advantage of trading using opposite LG Electronics and MUTUIONLINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, MUTUIONLINE 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 MUTUIONLINE will offset losses from the drop in MUTUIONLINE's long position.| LG Electronics vs. H FARM SPA | LG Electronics vs. Merit Medical Systems | LG Electronics vs. CompuGroup Medical SE | LG Electronics vs. NorAm Drilling AS |
| MUTUIONLINE vs. BRIT AMER TOBACCO | MUTUIONLINE vs. IMPERIAL TOBACCO | MUTUIONLINE vs. Darden Restaurants | MUTUIONLINE vs. T Mobile |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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