Correlation Between Samhwa Paint and LG Energy
Can any of the company-specific risk be diversified away by investing in both Samhwa Paint and LG Energy 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 Samhwa Paint and LG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samhwa Paint Industrial and LG Energy Solution, you can compare the effects of market volatilities on Samhwa Paint and LG Energy 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 Samhwa Paint with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samhwa Paint and LG Energy.
Diversification Opportunities for Samhwa Paint and LG Energy
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Samhwa and 373220 is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Samhwa Paint Industrial and LG Energy Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Energy Solution and Samhwa Paint 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 Samhwa Paint Industrial are associated (or correlated) with LG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Energy Solution has no effect on the direction of Samhwa Paint i.e., Samhwa Paint and LG Energy go up and down completely randomly.
Pair Corralation between Samhwa Paint and LG Energy
Assuming the 90 days trading horizon Samhwa Paint Industrial is expected to generate 1.0 times more return on investment than LG Energy. However, Samhwa Paint Industrial is 1.0 times less risky than LG Energy. It trades about 0.02 of its potential returns per unit of risk. LG Energy Solution is currently generating about -0.04 per unit of risk. If you would invest 650,000 in Samhwa Paint Industrial on September 20, 2024 and sell it today you would earn a total of 3,000 from holding Samhwa Paint Industrial or generate 0.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Samhwa Paint Industrial vs. LG Energy Solution
Performance |
Timeline |
Samhwa Paint Industrial |
LG Energy Solution |
Samhwa Paint and LG Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Samhwa Paint and LG Energy
The main advantage of trading using opposite Samhwa Paint and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samhwa Paint position performs unexpectedly, LG Energy 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 Energy will offset losses from the drop in LG Energy's long position.Samhwa Paint vs. Samsung Electronics Co | Samhwa Paint vs. Samsung Electronics Co | Samhwa Paint vs. SK Hynix | Samhwa Paint vs. POSCO Holdings |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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