Correlation Between Spolytech and LG Chemicals
Can any of the company-specific risk be diversified away by investing in both Spolytech and LG Chemicals 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 Spolytech and LG Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spolytech Co and LG Chemicals, you can compare the effects of market volatilities on Spolytech and LG Chemicals 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 Spolytech with a short position of LG Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spolytech and LG Chemicals.
Diversification Opportunities for Spolytech and LG Chemicals
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Spolytech and 051910 is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Spolytech Co and LG Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chemicals and Spolytech 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 Spolytech Co are associated (or correlated) with LG Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chemicals has no effect on the direction of Spolytech i.e., Spolytech and LG Chemicals go up and down completely randomly.
Pair Corralation between Spolytech and LG Chemicals
Assuming the 90 days trading horizon Spolytech Co is expected to generate 0.88 times more return on investment than LG Chemicals. However, Spolytech Co is 1.13 times less risky than LG Chemicals. It trades about -0.02 of its potential returns per unit of risk. LG Chemicals is currently generating about -0.16 per unit of risk. If you would invest 160,600 in Spolytech Co on October 20, 2024 and sell it today you would lose (7,000) from holding Spolytech Co or give up 4.36% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Spolytech Co vs. LG Chemicals
Performance |
Timeline |
Spolytech |
LG Chemicals |
Spolytech and LG Chemicals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Spolytech and LG Chemicals
The main advantage of trading using opposite Spolytech and LG Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spolytech position performs unexpectedly, LG Chemicals 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 Chemicals will offset losses from the drop in LG Chemicals' long position.Spolytech vs. Kukdong Oil Chemicals | Spolytech vs. Daewon Chemical Co | Spolytech vs. Hanil Chemical Ind | Spolytech vs. TK Chemical |
LG Chemicals vs. DB Financial Investment | LG Chemicals vs. E Investment Development | LG Chemicals vs. SBI Investment KOREA | LG Chemicals vs. EBEST Investment Securities |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
Commodity Directory Find actively traded commodities issued by global exchanges | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Bonds Directory Find actively traded corporate debentures issued by US companies |