Correlation Between LG Chemicals and 311960
Can any of the company-specific risk be diversified away by investing in both LG Chemicals and 311960 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 311960 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Chemicals and 311960, you can compare the effects of market volatilities on LG Chemicals and 311960 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 311960. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chemicals and 311960.
Diversification Opportunities for LG Chemicals and 311960
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 051910 and 311960 is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding LG Chemicals and 311960 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 311960 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 311960. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 311960 has no effect on the direction of LG Chemicals i.e., LG Chemicals and 311960 go up and down completely randomly.
Pair Corralation between LG Chemicals and 311960
Assuming the 90 days trading horizon LG Chemicals is expected to generate 0.5 times more return on investment than 311960. However, LG Chemicals is 2.02 times less risky than 311960. It trades about -0.06 of its potential returns per unit of risk. 311960 is currently generating about -0.04 per unit of risk. If you would invest 58,100,000 in LG Chemicals on September 26, 2024 and sell it today you would lose (32,800,000) from holding LG Chemicals or give up 56.45% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
LG Chemicals vs. 311960
Performance |
Timeline |
LG Chemicals |
311960 |
LG Chemicals and 311960 Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LG Chemicals and 311960
The main advantage of trading using opposite LG Chemicals and 311960 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chemicals position performs unexpectedly, 311960 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 311960 will offset losses from the drop in 311960's long position.LG Chemicals vs. POSCO Holdings | LG Chemicals vs. Hanwha Solutions | LG Chemicals vs. Lotte Chemical Corp | LG Chemicals vs. Hyundai Steel |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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