Correlation Between LG Electronics and THAI BEVERAGE
Can any of the company-specific risk be diversified away by investing in both LG Electronics and THAI BEVERAGE 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 THAI BEVERAGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and THAI BEVERAGE, you can compare the effects of market volatilities on LG Electronics and THAI BEVERAGE 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 THAI BEVERAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and THAI BEVERAGE.
Diversification Opportunities for LG Electronics and THAI BEVERAGE
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LGLG and THAI is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE 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 THAI BEVERAGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THAI BEVERAGE has no effect on the direction of LG Electronics i.e., LG Electronics and THAI BEVERAGE go up and down completely randomly.
Pair Corralation between LG Electronics and THAI BEVERAGE
Assuming the 90 days trading horizon LG Electronics is expected to under-perform the THAI BEVERAGE. But the stock apears to be less risky and, when comparing its historical volatility, LG Electronics is 1.48 times less risky than THAI BEVERAGE. The stock trades about -0.03 of its potential returns per unit of risk. The THAI BEVERAGE is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 35.00 in THAI BEVERAGE on August 28, 2024 and sell it today you would earn a total of 1.00 from holding THAI BEVERAGE or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Electronics vs. THAI BEVERAGE
Performance |
| Timeline |
| LG Electronics |
| THAI BEVERAGE |
LG Electronics and THAI BEVERAGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and THAI BEVERAGE
The main advantage of trading using opposite LG Electronics and THAI BEVERAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, THAI BEVERAGE 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 THAI BEVERAGE will offset losses from the drop in THAI BEVERAGE's long position.| LG Electronics vs. Apple Inc | LG Electronics vs. Apple Inc | LG Electronics vs. Apple Inc | LG Electronics vs. Apple Inc |
| THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Microsoft | THAI BEVERAGE vs. Microsoft |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Stocks Directory Find actively traded stocks across global markets |