Correlation Between LG Chemicals and Dongwha Enterprise

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

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

Diversification Opportunities for LG Chemicals and Dongwha Enterprise

0.0

Correlation Coefficient

LG Chemicals  Dongwha Enterprise

Pay attention - limited upside

The 3 months correlation between 051910 and Dongwha is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and Dongwha Enterprise CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwha Enterprise CoLtd and LG Chemicals 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 Chemicals are associated (or correlated) with Dongwha Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwha Enterprise CoLtd has no effect on the direction of LG Chemicals i.e., LG Chemicals and Dongwha Enterprise go up and down completely randomly.

Pair Corralation between LG Chemicals and Dongwha Enterprise

If you would invest  0.00  in Dongwha Enterprise CoLtd on October 24, 2024 and sell it today you would earn a total of  0.00  from holding Dongwha Enterprise CoLtd or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

LG Chemicals  vs.  Dongwha Enterprise CoLtd

LG Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LG Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Dongwha Enterprise CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dongwha Enterprise CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with LG Chemicals and Dongwha Enterprise

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

The idea behind LG Chemicals and Dongwha Enterprise CoLtd 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.