Correlation Between Dongbang Transport and LG Energy
Can any of the company-specific risk be diversified away by investing in both Dongbang Transport 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 Dongbang Transport and LG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongbang Transport Logistics and LG Energy Solution, you can compare the effects of market volatilities on Dongbang Transport 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 Dongbang Transport with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and LG Energy.
Diversification Opportunities for Dongbang Transport and LG Energy
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dongbang and 373220 is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics 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 Dongbang Transport 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 Dongbang Transport Logistics 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 Dongbang Transport i.e., Dongbang Transport and LG Energy go up and down completely randomly.
Pair Corralation between Dongbang Transport and LG Energy
Assuming the 90 days trading horizon Dongbang Transport Logistics is expected to generate 1.28 times more return on investment than LG Energy. However, Dongbang Transport is 1.28 times more volatile than LG Energy Solution. It trades about 0.0 of its potential returns per unit of risk. LG Energy Solution is currently generating about 0.0 per unit of risk. If you would invest 263,500 in Dongbang Transport Logistics on September 16, 2024 and sell it today you would lose (45,500) from holding Dongbang Transport Logistics or give up 17.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbang Transport Logistics vs. LG Energy Solution
Performance |
| Timeline |
| Dongbang Transport |
| LG Energy Solution |
Dongbang Transport and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Transport and LG Energy
The main advantage of trading using opposite Dongbang Transport and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Transport 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.| Dongbang Transport vs. Samsung Electronics Co | Dongbang Transport vs. Samsung Electronics Co | Dongbang Transport vs. SK Hynix | Dongbang Transport vs. POSCO Holdings |
| LG Energy vs. Dongbang Transport Logistics | LG Energy vs. Choil Aluminum | LG Energy vs. Neungyule Education | LG Energy vs. Inzi Display CoLtd |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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