Correlation Between LG Electronics and T3 Entertainment
Can any of the company-specific risk be diversified away by investing in both LG Electronics and T3 Entertainment 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 Electronics and T3 Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Electronics and T3 Entertainment Co, you can compare the effects of market volatilities on LG Electronics and T3 Entertainment 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 Electronics with a short position of T3 Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and T3 Entertainment.
Diversification Opportunities for LG Electronics and T3 Entertainment
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 066570 and 204610 is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and T3 Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T3 Entertainment and LG Electronics 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 Electronics are associated (or correlated) with T3 Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T3 Entertainment has no effect on the direction of LG Electronics i.e., LG Electronics and T3 Entertainment go up and down completely randomly.
Pair Corralation between LG Electronics and T3 Entertainment
Assuming the 90 days trading horizon LG Electronics is expected to generate 0.76 times more return on investment than T3 Entertainment. However, LG Electronics is 1.32 times less risky than T3 Entertainment. It trades about 0.01 of its potential returns per unit of risk. T3 Entertainment Co is currently generating about 0.0 per unit of risk. If you would invest 8,858,302 in LG Electronics on September 25, 2024 and sell it today you would lose (168,302) from holding LG Electronics or give up 1.9% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
LG Electronics vs. T3 Entertainment Co
Performance |
Timeline |
LG Electronics |
T3 Entertainment |
LG Electronics and T3 Entertainment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LG Electronics and T3 Entertainment
The main advantage of trading using opposite LG Electronics and T3 Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics position performs unexpectedly, T3 Entertainment 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 T3 Entertainment will offset losses from the drop in T3 Entertainment's long position.LG Electronics vs. Clean Science co | LG Electronics vs. Incar Financial Service | LG Electronics vs. Kukdong Oil Chemicals | LG Electronics vs. Lotte Non Life Insurance |
T3 Entertainment vs. Samsung Electronics Co | T3 Entertainment vs. Samsung Electronics Co | T3 Entertainment vs. LG Energy Solution | T3 Entertainment vs. SK Hynix |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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