Correlation Between Hanwha InvestmentSecuri and LG Corp
Can any of the company-specific risk be diversified away by investing in both Hanwha InvestmentSecuri and LG Corp 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 Hanwha InvestmentSecuri and LG Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha InvestmentSecurities Co and LG Corp, you can compare the effects of market volatilities on Hanwha InvestmentSecuri and LG Corp 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 Hanwha InvestmentSecuri with a short position of LG Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha InvestmentSecuri and LG Corp.
Diversification Opportunities for Hanwha InvestmentSecuri and LG Corp
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hanwha and 003550 is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha InvestmentSecurities Co and LG Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Corp and Hanwha InvestmentSecuri 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 Hanwha InvestmentSecurities Co are associated (or correlated) with LG Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Corp has no effect on the direction of Hanwha InvestmentSecuri i.e., Hanwha InvestmentSecuri and LG Corp go up and down completely randomly.
Pair Corralation between Hanwha InvestmentSecuri and LG Corp
Assuming the 90 days trading horizon Hanwha InvestmentSecurities Co is expected to generate 3.12 times more return on investment than LG Corp. However, Hanwha InvestmentSecuri is 3.12 times more volatile than LG Corp. It trades about 0.07 of its potential returns per unit of risk. LG Corp is currently generating about -0.09 per unit of risk. If you would invest 634,000 in Hanwha InvestmentSecurities Co on September 13, 2024 and sell it today you would earn a total of 86,000 from holding Hanwha InvestmentSecurities Co or generate 13.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hanwha InvestmentSecurities Co vs. LG Corp
Performance |
Timeline |
Hanwha InvestmentSecuri |
LG Corp |
Hanwha InvestmentSecuri and LG Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hanwha InvestmentSecuri and LG Corp
The main advantage of trading using opposite Hanwha InvestmentSecuri and LG Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha InvestmentSecuri position performs unexpectedly, LG Corp 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 Corp will offset losses from the drop in LG Corp's long position.Hanwha InvestmentSecuri vs. Nh Investment And | Hanwha InvestmentSecuri vs. DSC Investment | Hanwha InvestmentSecuri vs. Solution Advanced Technology | Hanwha InvestmentSecuri vs. Busan Industrial Co |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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