Correlation Between LG Electronics and PT Bank

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

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

Diversification Opportunities for LG Electronics and PT Bank

0.0

Correlation Coefficient

LG Electronics  PT Bank

Pay attention - limited upside

The 3 months correlation between LGLG and NKX is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and PT Bank CIMB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank CIMB 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 PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank CIMB has no effect on the direction of LG Electronics i.e., LG Electronics and PT Bank go up and down completely randomly.

Pair Corralation between LG Electronics and PT Bank

If you would invest  1,090  in LG Electronics on May 7, 2025 and sell it today you would earn a total of  10.00  from holding LG Electronics or generate 0.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

LG Electronics  vs.  PT Bank CIMB

LG Electronics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LG Electronics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, LG Electronics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

PT Bank CIMB

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Bank CIMB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PT Bank is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with LG Electronics and PT Bank

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

The idea behind LG Electronics and PT Bank CIMB 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.