Correlation Between Lotte Chilsung and LG Energy
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung 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 Chilsung 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 Chilsung Beverage and LG Energy Solution, you can compare the effects of market volatilities on Lotte Chilsung 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 Chilsung with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and LG Energy.
Diversification Opportunities for Lotte Chilsung and LG Energy
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lotte and 373220 is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage 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 Chilsung 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 Chilsung Beverage 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 Chilsung i.e., Lotte Chilsung and LG Energy go up and down completely randomly.
Pair Corralation between Lotte Chilsung and LG Energy
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to generate 0.54 times more return on investment than LG Energy. However, Lotte Chilsung Beverage is 1.87 times less risky than LG Energy. It trades about 0.09 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 11,260,000 in Lotte Chilsung Beverage on September 12, 2024 and sell it today you would earn a total of 370,000 from holding Lotte Chilsung Beverage or generate 3.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. LG Energy Solution
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| LG Energy Solution |
Lotte Chilsung and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and LG Energy
The main advantage of trading using opposite Lotte Chilsung and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung 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 Chilsung vs. Samsung Electronics Co | Lotte Chilsung vs. Samsung Electronics Co | Lotte Chilsung vs. LG Energy Solution | Lotte Chilsung vs. SK Hynix |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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