Correlation Between LG Electronics and Total Gabon
Can any of the company-specific risk be diversified away by investing in both LG Electronics and Total Gabon 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 Total Gabon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and Total Gabon, you can compare the effects of market volatilities on LG Electronics and Total Gabon 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 Total Gabon. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and Total Gabon.
Diversification Opportunities for LG Electronics and Total Gabon
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LGLG and Total is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and Total Gabon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Gabon 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 Total Gabon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Gabon has no effect on the direction of LG Electronics i.e., LG Electronics and Total Gabon go up and down completely randomly.
Pair Corralation between LG Electronics and Total Gabon
Assuming the 90 days trading horizon LG Electronics is expected to under-perform the Total Gabon. In addition to that, LG Electronics is 1.15 times more volatile than Total Gabon. It trades about -0.01 of its total potential returns per unit of risk. Total Gabon is currently generating about 0.08 per unit of volatility. If you would invest 7,421 in Total Gabon on December 3, 2024 and sell it today you would earn a total of 9,829 from holding Total Gabon or generate 132.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Electronics vs. Total Gabon
Performance |
| Timeline |
| LG Electronics |
| Total Gabon |
LG Electronics and Total Gabon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and Total Gabon
The main advantage of trading using opposite LG Electronics and Total Gabon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, Total Gabon 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 Total Gabon will offset losses from the drop in Total Gabon's long position.| LG Electronics vs. SIEM OFFSHORE NEW | LG Electronics vs. UNITED RENTALS | LG Electronics vs. Monument Mining Limited | LG Electronics vs. RESMINING UNSPADR10 |
| Total Gabon vs. SALESFORCE INC CDR | Total Gabon vs. CITY OFFICE REIT | Total Gabon vs. ZhongAn Online P | Total Gabon vs. Hisense Home Appliances |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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