Correlation Between Panasonic Corp and LG Electronics
Can any of the company-specific risk be diversified away by investing in both Panasonic Corp 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 Panasonic Corp and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Panasonic Corp and LG Electronics, you can compare the effects of market volatilities on Panasonic Corp 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 Panasonic Corp with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panasonic Corp and LG Electronics.
Diversification Opportunities for Panasonic Corp and LG Electronics
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Panasonic and LGLG is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Panasonic Corp and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and Panasonic Corp 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 Panasonic Corp 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 Panasonic Corp i.e., Panasonic Corp and LG Electronics go up and down completely randomly.
Pair Corralation between Panasonic Corp and LG Electronics
Assuming the 90 days trading horizon Panasonic Corp is expected to generate 1.11 times more return on investment than LG Electronics. However, Panasonic Corp is 1.11 times more volatile than LG Electronics. It trades about -0.01 of its potential returns per unit of risk. LG Electronics is currently generating about -0.02 per unit of risk. If you would invest 1,061 in Panasonic Corp on August 31, 2024 and sell it today you would lose (135.00) from holding Panasonic Corp or give up 12.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
Panasonic Corp vs. LG Electronics
Performance |
| Timeline |
| Panasonic Corp |
| LG Electronics |
Panasonic Corp and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Panasonic Corp and LG Electronics
The main advantage of trading using opposite Panasonic Corp and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Panasonic Corp 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.| Panasonic Corp vs. LG Electronics | Panasonic Corp vs. SCANDMEDICAL SOLDK 040 | Panasonic Corp vs. Clearside Biomedical | Panasonic Corp vs. Apollo Medical 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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