Correlation Between CEOTRONICS (CEKSG) and LG Electronics

Can any of the company-specific risk be diversified away by investing in both CEOTRONICS (CEKSG) and LG Electronics 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 CEOTRONICS (CEKSG) and LG Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CEOTRONICS and LG Electronics, you can compare the effects of market volatilities on CEOTRONICS (CEKSG) and LG Electronics 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 CEOTRONICS (CEKSG) with a short position of LG Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEOTRONICS (CEKSG) and LG Electronics.

Diversification Opportunities for CEOTRONICS (CEKSG) and LG Electronics

-0.63

Correlation Coefficient

CEOTRONICS (CEKSG)  LG Electronics

Excellent diversification

The 3 months correlation between CEOTRONICS and LGLG is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding CEOTRONICS and LG Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Electronics and CEOTRONICS (CEKSG) 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 CEOTRONICS are associated (or correlated) with LG Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Electronics has no effect on the direction of CEOTRONICS (CEKSG) i.e., CEOTRONICS (CEKSG) and LG Electronics go up and down completely randomly.

Pair Corralation between CEOTRONICS (CEKSG) and LG Electronics

Assuming the 90 days trading horizon CEOTRONICS is expected to under-perform the LG Electronics. But the stock apears to be less risky and, when comparing its historical volatility, CEOTRONICS is 1.28 times less risky than LG Electronics. The stock trades about -0.28 of its potential returns per unit of risk. The LG Electronics is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,290  in LG Electronics on October 10, 2024 and sell it today you would earn a total of  80.00  from holding LG Electronics or generate 6.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CEOTRONICS  vs.  LG Electronics

CEOTRONICS (CEKSG)

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CEOTRONICS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CEOTRONICS (CEKSG) unveiled solid returns over the last few months and may actually be approaching a breakup point.

LG Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LG Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with CEOTRONICS (CEKSG) and LG Electronics

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

The idea behind CEOTRONICS and LG Electronics 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.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.