Correlation Between USU Software and LG Electronics
Can any of the company-specific risk be diversified away by investing in both USU Software 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 USU Software and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USU Software AG and LG Electronics, you can compare the effects of market volatilities on USU Software 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 USU Software with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of USU Software and LG Electronics.
Diversification Opportunities for USU Software and LG Electronics
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between USU and LGLG is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding USU Software AG and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and USU Software 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 USU Software AG 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 USU Software i.e., USU Software and LG Electronics go up and down completely randomly.
Pair Corralation between USU Software and LG Electronics
Assuming the 90 days trading horizon USU Software AG is expected to generate 0.92 times more return on investment than LG Electronics. However, USU Software AG is 1.09 times less risky than LG Electronics. It trades about 0.02 of its potential returns per unit of risk. LG Electronics is currently generating about -0.01 per unit of risk. If you would invest 2,072 in USU Software AG on October 25, 2024 and sell it today you would earn a total of 128.00 from holding USU Software AG or generate 6.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
USU Software AG vs. LG Electronics
Performance |
| Timeline |
| USU Software AG |
| LG Electronics |
USU Software and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USU Software and LG Electronics
The main advantage of trading using opposite USU Software and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USU Software 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.| USU Software vs. Keck Seng Investments | USU Software vs. BlueScope Steel Limited | USU Software vs. Scottish Mortgage Investment | USU Software vs. United States Steel |
| LG Electronics vs. Renesas Electronics | LG Electronics vs. THAI BEVERAGE | LG Electronics vs. STMicroelectronics NV | LG Electronics vs. SAN MIGUEL BREWERY |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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