Correlation Between LG Uplus and Shinsegae Food

Can any of the company-specific risk be diversified away by investing in both LG Uplus and Shinsegae Food 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 LG Uplus and Shinsegae Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LG Uplus and Shinsegae Food, you can compare the effects of market volatilities on LG Uplus and Shinsegae Food 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 LG Uplus with a short position of Shinsegae Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Uplus and Shinsegae Food.

Diversification Opportunities for LG Uplus and Shinsegae Food

-0.52

Correlation Coefficient

LG Uplus  Shinsegae Food

Excellent diversification

The 3 months correlation between 032640 and Shinsegae is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding LG Uplus and Shinsegae Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Food and LG Uplus 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 LG Uplus are associated (or correlated) with Shinsegae Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae Food has no effect on the direction of LG Uplus i.e., LG Uplus and Shinsegae Food go up and down completely randomly.

Pair Corralation between LG Uplus and Shinsegae Food

Assuming the 90 days trading horizon LG Uplus is expected to generate 0.57 times more return on investment than Shinsegae Food. However, LG Uplus is 1.74 times less risky than Shinsegae Food. It trades about 0.02 of its potential returns per unit of risk. Shinsegae Food is currently generating about -0.03 per unit of risk. If you would invest  980,463  in LG Uplus on October 3, 2024 and sell it today you would earn a total of  52,537  from holding LG Uplus or generate 5.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

LG Uplus  vs.  Shinsegae Food

LG Uplus

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LG Uplus are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, LG Uplus may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Shinsegae Food

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shinsegae Food are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Shinsegae Food is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LG Uplus and Shinsegae Food

The main advantage of trading using opposite LG Uplus and Shinsegae Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Uplus position performs unexpectedly, Shinsegae Food 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 Shinsegae Food will offset losses from the drop in Shinsegae Food's long position.

The idea behind LG Uplus and Shinsegae Food pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .