Correlation Between Sekisui Chemical and LG Electronics
Can any of the company-specific risk be diversified away by investing in both Sekisui Chemical 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 Sekisui Chemical and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sekisui Chemical Co and LG Electronics, you can compare the effects of market volatilities on Sekisui Chemical 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 Sekisui Chemical with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sekisui Chemical and LG Electronics.
Diversification Opportunities for Sekisui Chemical and LG Electronics
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sekisui and LGLG is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sekisui Chemical Co and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and Sekisui Chemical 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 Sekisui Chemical Co 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 Sekisui Chemical i.e., Sekisui Chemical and LG Electronics go up and down completely randomly.
Pair Corralation between Sekisui Chemical and LG Electronics
Assuming the 90 days horizon Sekisui Chemical Co is expected to generate 1.1 times more return on investment than LG Electronics. However, Sekisui Chemical is 1.1 times more volatile than LG Electronics. It trades about 0.25 of its potential returns per unit of risk. LG Electronics is currently generating about -0.01 per unit of risk. If you would invest 1,280 in Sekisui Chemical Co on August 27, 2024 and sell it today you would earn a total of 130.00 from holding Sekisui Chemical Co or generate 10.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sekisui Chemical Co vs. LG Electronics
Performance |
| Timeline |
| Sekisui Chemical |
| LG Electronics |
Sekisui Chemical and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sekisui Chemical and LG Electronics
The main advantage of trading using opposite Sekisui Chemical and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sekisui Chemical 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.| Sekisui Chemical vs. Ming Le Sports | Sekisui Chemical vs. Eidesvik Offshore ASA | Sekisui Chemical vs. PLAYTIKA HOLDING DL 01 | Sekisui Chemical vs. BW OFFSHORE LTD |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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