Correlation Between LG Electronics and ACCSYS TECHPLC

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

By analyzing existing cross correlation between LG Electronics and ACCSYS TECHPLC EO, you can compare the effects of market volatilities on LG Electronics and ACCSYS TECHPLC 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 ACCSYS TECHPLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and ACCSYS TECHPLC.

Diversification Opportunities for LG Electronics and ACCSYS TECHPLC

0.44

Correlation Coefficient

LG Electronics  ACCSYS TECHPLC

Very weak diversification

The 3 months correlation between LGLG and ACCSYS is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and ACCSYS TECHPLC EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACCSYS TECHPLC EO 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 ACCSYS TECHPLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACCSYS TECHPLC EO has no effect on the direction of LG Electronics i.e., LG Electronics and ACCSYS TECHPLC go up and down completely randomly.

Pair Corralation between LG Electronics and ACCSYS TECHPLC

Assuming the 90 days trading horizon LG Electronics is expected to under-perform the ACCSYS TECHPLC. But the stock apears to be less risky and, when comparing its historical volatility, LG Electronics is 1.49 times less risky than ACCSYS TECHPLC. The stock trades about -0.08 of its potential returns per unit of risk. The ACCSYS TECHPLC EO is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  51.00  in ACCSYS TECHPLC EO on December 20, 2024 and sell it today you would earn a total of  0.00  from holding ACCSYS TECHPLC EO or generate 0.0% return on investment over 90 days.

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

LG Electronics  vs.  ACCSYS TECHPLC EO

LG Electronics

Risk-Adjusted Performance

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 technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

ACCSYS TECHPLC EO

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ACCSYS TECHPLC EO are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ACCSYS TECHPLC is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LG Electronics and ACCSYS TECHPLC

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

The idea behind LG Electronics and ACCSYS TECHPLC EO 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.