Correlation Between Manulife Financial and LG Cyber

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

By analyzing existing cross correlation between Manulife Financial Corp and LG Cyber Security, you can compare the effects of market volatilities on Manulife Financial and LG Cyber 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 Manulife Financial with a short position of LG Cyber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Financial and LG Cyber.

Diversification Opportunities for Manulife Financial and LG Cyber

0.1

Correlation Coefficient

Manulife Financial  LG Cyber

Average diversification

The 3 months correlation between Manulife and ISPY is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Financial Corp and LG Cyber Security in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Cyber Security and Manulife Financial 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 Manulife Financial Corp are associated (or correlated) with LG Cyber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Cyber Security has no effect on the direction of Manulife Financial i.e., Manulife Financial and LG Cyber go up and down completely randomly.

Pair Corralation between Manulife Financial and LG Cyber

Considering the 90-day investment horizon Manulife Financial Corp is expected to under-perform the LG Cyber. But the stock apears to be less risky and, when comparing its historical volatility, Manulife Financial Corp is 1.05 times less risky than LG Cyber. The stock trades about -0.11 of its potential returns per unit of risk. The LG Cyber Security is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  2,213  in LG Cyber Security on January 26, 2024 and sell it today you would lose (53.00) from holding LG Cyber Security or give up 2.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Manulife Financial Corp  vs.  LG Cyber Security

Manulife Financial Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Manulife Financial Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Manulife Financial may actually be approaching a critical reversion point that can send shares even higher in May 2024.

LG Cyber Security

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LG Cyber Security has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, LG Cyber is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Manulife Financial and LG Cyber

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

The idea behind Manulife Financial Corp and LG Cyber Security 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.