Correlation Between LG Uplus and WooDeumGee Farm

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

By analyzing existing cross correlation between LG Uplus and WooDeumGee Farm Co,, you can compare the effects of market volatilities on LG Uplus and WooDeumGee Farm 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 WooDeumGee Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Uplus and WooDeumGee Farm.

Diversification Opportunities for LG Uplus and WooDeumGee Farm

0.75

Correlation Coefficient

LG Uplus  WooDeumGee Farm

Poor diversification

The 3 months correlation between 032640 and WooDeumGee is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding LG Uplus and WooDeumGee Farm Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WooDeumGee Farm Co, 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 WooDeumGee Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WooDeumGee Farm Co, has no effect on the direction of LG Uplus i.e., LG Uplus and WooDeumGee Farm go up and down completely randomly.

Pair Corralation between LG Uplus and WooDeumGee Farm

Assuming the 90 days trading horizon LG Uplus is expected to generate 0.7 times more return on investment than WooDeumGee Farm. However, LG Uplus is 1.42 times less risky than WooDeumGee Farm. It trades about 0.02 of its potential returns per unit of risk. WooDeumGee Farm Co, is currently generating about -0.06 per unit of risk. If you would invest  1,045,000  in LG Uplus on December 11, 2024 and sell it today you would earn a total of  8,000  from holding LG Uplus or generate 0.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

LG Uplus  vs.  WooDeumGee Farm Co,

LG Uplus

Risk-Adjusted Performance

Very Weak

Over the last 90 days LG Uplus has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LG Uplus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

WooDeumGee Farm Co,

Risk-Adjusted Performance

Very Weak

Over the last 90 days WooDeumGee Farm Co, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, WooDeumGee Farm 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 WooDeumGee Farm

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

The idea behind LG Uplus and WooDeumGee Farm Co, 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.