Correlation Between LG Uplus and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both LG Uplus and Samsung 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 LG Uplus and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Uplus and Samsung Electronics Co, you can compare the effects of market volatilities on LG Uplus and Samsung 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 LG Uplus with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Uplus and Samsung Electronics.
Diversification Opportunities for LG Uplus and Samsung Electronics
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 032640 and Samsung is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding LG Uplus and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and LG Uplus 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 Uplus are associated (or correlated) with Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of LG Uplus i.e., LG Uplus and Samsung Electronics go up and down completely randomly.
Pair Corralation between LG Uplus and Samsung Electronics
Assuming the 90 days trading horizon LG Uplus is expected to generate 0.58 times more return on investment than Samsung Electronics. However, LG Uplus is 1.73 times less risky than Samsung Electronics. It trades about 0.12 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.1 per unit of risk. If you would invest 993,000 in LG Uplus on September 23, 2024 and sell it today you would earn a total of 96,000 from holding LG Uplus or generate 9.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
LG Uplus vs. Samsung Electronics Co
Performance |
Timeline |
LG Uplus |
Samsung Electronics |
LG Uplus and Samsung Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LG Uplus and Samsung Electronics
The main advantage of trading using opposite LG Uplus and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Uplus position performs unexpectedly, Samsung 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 Samsung Electronics will offset losses from the drop in Samsung Electronics' long position.LG Uplus vs. Samsung Electronics Co | LG Uplus vs. Samsung Electronics Co | LG Uplus vs. KB Financial Group | LG Uplus vs. Shinhan Financial Group |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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