Correlation Between Lion One and LG Electronics
Can any of the company-specific risk be diversified away by investing in both Lion One and LG Electronics 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 Lion One and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion One Metals and LG Electronics, you can compare the effects of market volatilities on Lion One and LG Electronics 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 Lion One with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and LG Electronics.
Diversification Opportunities for Lion One and LG Electronics
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lion and LGLG is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and Lion One 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 Lion One Metals are associated (or correlated) with LG Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics has no effect on the direction of Lion One i.e., Lion One and LG Electronics go up and down completely randomly.
Pair Corralation between Lion One and LG Electronics
Assuming the 90 days horizon Lion One Metals is expected to under-perform the LG Electronics. In addition to that, Lion One is 2.05 times more volatile than LG Electronics. It trades about -0.22 of its total potential returns per unit of risk. LG Electronics is currently generating about -0.11 per unit of volatility. If you would invest 1,520 in LG Electronics on August 24, 2024 and sell it today you would lose (70.00) from holding LG Electronics or give up 4.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion One Metals vs. LG Electronics
Performance |
| Timeline |
| Lion One Metals |
| LG Electronics |
Lion One and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion One and LG Electronics
The main advantage of trading using opposite Lion One and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, LG Electronics 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 LG Electronics will offset losses from the drop in LG Electronics' long position.| Lion One vs. Franco Nevada | Lion One vs. Agnico Eagle Mines | Lion One vs. Superior Plus Corp | Lion One vs. NMI Holdings |
| LG Electronics vs. Apple Inc | LG Electronics vs. Apple Inc | LG Electronics vs. Apple Inc | LG Electronics vs. Apple Inc |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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