Correlation Between Lotte Non-Life and LG Energy
Can any of the company-specific risk be diversified away by investing in both Lotte Non-Life and LG Energy 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 Lotte Non-Life and LG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Non Life and LG Energy Solution, you can compare the effects of market volatilities on Lotte Non-Life and LG Energy 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 Lotte Non-Life with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Non-Life and LG Energy.
Diversification Opportunities for Lotte Non-Life and LG Energy
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lotte and 373220 is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Non Life and LG Energy Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Energy Solution and Lotte Non-Life 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 Lotte Non Life are associated (or correlated) with LG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Energy Solution has no effect on the direction of Lotte Non-Life i.e., Lotte Non-Life and LG Energy go up and down completely randomly.
Pair Corralation between Lotte Non-Life and LG Energy
Assuming the 90 days trading horizon Lotte Non Life is expected to generate 1.36 times more return on investment than LG Energy. However, Lotte Non-Life is 1.36 times more volatile than LG Energy Solution. It trades about 0.03 of its potential returns per unit of risk. LG Energy Solution is currently generating about -0.02 per unit of risk. If you would invest 152,200 in Lotte Non Life on November 27, 2024 and sell it today you would earn a total of 33,700 from holding Lotte Non Life or generate 22.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Non Life vs. LG Energy Solution
Performance |
| Timeline |
| Lotte Non Life |
| LG Energy Solution |
Lotte Non-Life and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Non-Life and LG Energy
The main advantage of trading using opposite Lotte Non-Life and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Non-Life position performs unexpectedly, LG Energy 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 Energy will offset losses from the drop in LG Energy's long position.| Lotte Non-Life vs. DC Media Co | Lotte Non-Life vs. Nasmedia Co | Lotte Non-Life vs. ChipsMedia | Lotte Non-Life vs. JYP Entertainment Corp |
| LG Energy vs. Worldex Industry Trading | LG Energy vs. Aju IB Investment | LG Energy vs. Hana Financial | LG Energy vs. Jeju Bank |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |