Correlation Between SENECA FOODS-A and LG Electronics
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A 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 SENECA FOODS-A and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SENECA FOODS A and LG Electronics, you can compare the effects of market volatilities on SENECA FOODS-A 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 SENECA FOODS-A with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and LG Electronics.
Diversification Opportunities for SENECA FOODS-A and LG Electronics
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SENECA and LGLG is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and SENECA FOODS-A 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 SENECA FOODS A 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 SENECA FOODS-A i.e., SENECA FOODS-A and LG Electronics go up and down completely randomly.
Pair Corralation between SENECA FOODS-A and LG Electronics
Assuming the 90 days trading horizon SENECA FOODS A is expected to generate 1.44 times more return on investment than LG Electronics. However, SENECA FOODS-A is 1.44 times more volatile 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 5,650 in SENECA FOODS A on September 3, 2024 and sell it today you would earn a total of 800.00 from holding SENECA FOODS A or generate 14.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SENECA FOODS A vs. LG Electronics
Performance |
| Timeline |
| SENECA FOODS A |
| LG Electronics |
SENECA FOODS-A and LG Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS-A and LG Electronics
The main advantage of trading using opposite SENECA FOODS-A and LG Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A 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.| SENECA FOODS-A vs. TOTAL GABON | SENECA FOODS-A vs. Walgreens Boots Alliance | SENECA FOODS-A vs. Peak Resources Limited |
| LG Electronics vs. Summit Hotel Properties | LG Electronics vs. SENECA FOODS A | LG Electronics vs. Meli Hotels International | LG Electronics vs. MELIA HOTELS |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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