Correlation Between LG Uplus and Hankukpackage

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

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

Diversification Opportunities for LG Uplus and Hankukpackage

-0.56

Correlation Coefficient

LG Uplus  Hankukpackage

Excellent diversification

The 3 months correlation between 032640 and Hankukpackage is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding LG Uplus and Hankukpackage Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankukpackage 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 Hankukpackage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankukpackage has no effect on the direction of LG Uplus i.e., LG Uplus and Hankukpackage go up and down completely randomly.

Pair Corralation between LG Uplus and Hankukpackage

Assuming the 90 days trading horizon LG Uplus is expected to generate 0.53 times more return on investment than Hankukpackage. However, LG Uplus is 1.9 times less risky than Hankukpackage. It trades about -0.06 of its potential returns per unit of risk. Hankukpackage Co is currently generating about -0.04 per unit of risk. If you would invest  1,124,000  in LG Uplus on September 25, 2024 and sell it today you would lose (28,000) from holding LG Uplus or give up 2.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

LG Uplus  vs.  Hankukpackage Co

LG Uplus

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LG Uplus are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, LG Uplus may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hankukpackage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hankukpackage Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hankukpackage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LG Uplus and Hankukpackage

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

The idea behind LG Uplus and Hankukpackage Co 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.