Correlation Between LG Electronics and MOWI ASA
Can any of the company-specific risk be diversified away by investing in both LG Electronics and MOWI ASA 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 MOWI ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and MOWI ASA SPADR, you can compare the effects of market volatilities on LG Electronics and MOWI ASA 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 MOWI ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and MOWI ASA.
Diversification Opportunities for LG Electronics and MOWI ASA
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LGLG and MOWI is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and MOWI ASA SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOWI ASA SPADR 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 MOWI ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOWI ASA SPADR has no effect on the direction of LG Electronics i.e., LG Electronics and MOWI ASA go up and down completely randomly.
Pair Corralation between LG Electronics and MOWI ASA
Assuming the 90 days trading horizon LG Electronics is expected to under-perform the MOWI ASA. In addition to that, LG Electronics is 1.84 times more volatile than MOWI ASA SPADR. It trades about -0.06 of its total potential returns per unit of risk. MOWI ASA SPADR is currently generating about 0.17 per unit of volatility. If you would invest 1,636 in MOWI ASA SPADR on August 28, 2024 and sell it today you would earn a total of 84.00 from holding MOWI ASA SPADR or generate 5.13% 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. MOWI ASA SPADR
Performance |
| Timeline |
| LG Electronics |
| MOWI ASA SPADR |
LG Electronics and MOWI ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and MOWI ASA
The main advantage of trading using opposite LG Electronics and MOWI ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, MOWI ASA 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 MOWI ASA will offset losses from the drop in MOWI ASA's long position.| LG Electronics vs. Datadog | LG Electronics vs. Molson Coors Beverage | LG Electronics vs. TERADATA | LG Electronics vs. National Beverage Corp |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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