Correlation Between Bohae Brewery and LG Energy
Can any of the company-specific risk be diversified away by investing in both Bohae Brewery 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 Bohae Brewery and LG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bohae Brewery and LG Energy Solution, you can compare the effects of market volatilities on Bohae Brewery 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 Bohae Brewery with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bohae Brewery and LG Energy.
Diversification Opportunities for Bohae Brewery and LG Energy
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bohae and 373220 is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Bohae Brewery 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 Bohae Brewery 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 Bohae Brewery 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 Bohae Brewery i.e., Bohae Brewery and LG Energy go up and down completely randomly.
Pair Corralation between Bohae Brewery and LG Energy
Assuming the 90 days trading horizon Bohae Brewery is expected to generate 2.25 times more return on investment than LG Energy. However, Bohae Brewery is 2.25 times more volatile than LG Energy Solution. It trades about 0.13 of its potential returns per unit of risk. LG Energy Solution is currently generating about -0.08 per unit of risk. If you would invest 41,600 in Bohae Brewery on September 12, 2024 and sell it today you would earn a total of 7,500 from holding Bohae Brewery or generate 18.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bohae Brewery vs. LG Energy Solution
Performance |
| Timeline |
| Bohae Brewery |
| LG Energy Solution |
Bohae Brewery and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bohae Brewery and LG Energy
The main advantage of trading using opposite Bohae Brewery and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bohae Brewery 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.| Bohae Brewery vs. Korea New Network | Bohae Brewery vs. ICD Co | Bohae Brewery vs. DYPNF CoLtd | Bohae Brewery vs. Solution Advanced Technology |
| LG Energy vs. Bohae Brewery | LG Energy vs. Hanjin Transportation Co | LG Energy vs. Daehan Steel | LG Energy vs. Lotte Chilsung Beverage |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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