Correlation Between KT Submarine and LG Household
Can any of the company-specific risk be diversified away by investing in both KT Submarine and LG Household 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 KT Submarine and LG Household into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KT Submarine Telecom and LG Household Healthcare, you can compare the effects of market volatilities on KT Submarine and LG Household 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 KT Submarine with a short position of LG Household. Check out your portfolio center. Please also check ongoing floating volatility patterns of KT Submarine and LG Household.
Diversification Opportunities for KT Submarine and LG Household
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 060370 and 051900 is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding KT Submarine Telecom and LG Household Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Household Healthcare and KT Submarine 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 KT Submarine Telecom are associated (or correlated) with LG Household. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Household Healthcare has no effect on the direction of KT Submarine i.e., KT Submarine and LG Household go up and down completely randomly.
Pair Corralation between KT Submarine and LG Household
Assuming the 90 days trading horizon KT Submarine Telecom is expected to under-perform the LG Household. In addition to that, KT Submarine is 1.62 times more volatile than LG Household Healthcare. It trades about -0.08 of its total potential returns per unit of risk. LG Household Healthcare is currently generating about -0.11 per unit of volatility. If you would invest 37,400,000 in LG Household Healthcare on September 25, 2024 and sell it today you would lose (6,050,000) from holding LG Household Healthcare or give up 16.18% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
KT Submarine Telecom vs. LG Household Healthcare
Performance |
Timeline |
KT Submarine Telecom |
LG Household Healthcare |
KT Submarine and LG Household Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KT Submarine and LG Household
The main advantage of trading using opposite KT Submarine and LG Household positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KT Submarine position performs unexpectedly, LG Household 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 Household will offset losses from the drop in LG Household's long position.KT Submarine vs. AptaBio Therapeutics | KT Submarine vs. Wonbang Tech Co | KT Submarine vs. Busan Industrial Co | KT Submarine vs. Busan Ind |
LG Household vs. Hana Financial | LG Household vs. Korean Reinsurance Co | LG Household vs. Samyoung Electronics Co | LG Household vs. Dongbu Insurance Co |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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