Correlation Between Hanjoo Light and LG Chemicals
Can any of the company-specific risk be diversified away by investing in both Hanjoo Light and LG Chemicals 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 Hanjoo Light and LG Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanjoo Light Metal and LG Chemicals, you can compare the effects of market volatilities on Hanjoo Light and LG Chemicals 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 Hanjoo Light with a short position of LG Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjoo Light and LG Chemicals.
Diversification Opportunities for Hanjoo Light and LG Chemicals
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hanjoo and 051910 is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Hanjoo Light Metal and LG Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chemicals and Hanjoo Light 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 Hanjoo Light Metal are associated (or correlated) with LG Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chemicals has no effect on the direction of Hanjoo Light i.e., Hanjoo Light and LG Chemicals go up and down completely randomly.
Pair Corralation between Hanjoo Light and LG Chemicals
Assuming the 90 days trading horizon Hanjoo Light Metal is expected to under-perform the LG Chemicals. In addition to that, Hanjoo Light is 1.72 times more volatile than LG Chemicals. It trades about -0.06 of its total potential returns per unit of risk. LG Chemicals is currently generating about -0.06 per unit of volatility. If you would invest 60,100,000 in LG Chemicals on September 24, 2024 and sell it today you would lose (34,350,000) from holding LG Chemicals or give up 57.15% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 97.31% |
Values | Daily Returns |
Hanjoo Light Metal vs. LG Chemicals
Performance |
Timeline |
Hanjoo Light Metal |
LG Chemicals |
Hanjoo Light and LG Chemicals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hanjoo Light and LG Chemicals
The main advantage of trading using opposite Hanjoo Light and LG Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjoo Light position performs unexpectedly, LG Chemicals 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 Chemicals will offset losses from the drop in LG Chemicals' long position.Hanjoo Light vs. Jeju Bank | Hanjoo Light vs. Iljin Display | Hanjoo Light vs. Display Tech Co | Hanjoo Light vs. Samsung Life Insurance |
LG Chemicals vs. POSCO Holdings | LG Chemicals vs. Hanwha Solutions | LG Chemicals vs. Lotte Chemical Corp | LG Chemicals vs. Hyundai Steel |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |