Correlation Between LG Uplus and DongKook Pharmaceutical
Can any of the company-specific risk be diversified away by investing in both LG Uplus and DongKook Pharmaceutical 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 DongKook Pharmaceutical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Uplus and DongKook Pharmaceutical Co, you can compare the effects of market volatilities on LG Uplus and DongKook Pharmaceutical 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 DongKook Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Uplus and DongKook Pharmaceutical.
Diversification Opportunities for LG Uplus and DongKook Pharmaceutical
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 032640 and DongKook is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding LG Uplus and DongKook Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DongKook Pharmaceutical 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 DongKook Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DongKook Pharmaceutical has no effect on the direction of LG Uplus i.e., LG Uplus and DongKook Pharmaceutical go up and down completely randomly.
Pair Corralation between LG Uplus and DongKook Pharmaceutical
Assuming the 90 days trading horizon LG Uplus is expected to generate 0.65 times more return on investment than DongKook Pharmaceutical. However, LG Uplus is 1.54 times less risky than DongKook Pharmaceutical. It trades about 0.13 of its potential returns per unit of risk. DongKook Pharmaceutical Co is currently generating about -0.01 per unit of risk. If you would invest 992,000 in LG Uplus on September 26, 2024 and sell it today you would earn a total of 107,000 from holding LG Uplus or generate 10.79% 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. DongKook Pharmaceutical Co
Performance |
Timeline |
LG Uplus |
DongKook Pharmaceutical |
LG Uplus and DongKook Pharmaceutical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LG Uplus and DongKook Pharmaceutical
The main advantage of trading using opposite LG Uplus and DongKook Pharmaceutical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Uplus position performs unexpectedly, DongKook Pharmaceutical 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 DongKook Pharmaceutical will offset losses from the drop in DongKook Pharmaceutical's 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 |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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