Correlation Between Jeju Bank and LG Energy
Can any of the company-specific risk be diversified away by investing in both Jeju Bank 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 Jeju Bank and LG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeju Bank and LG Energy Solution, you can compare the effects of market volatilities on Jeju Bank 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 Jeju Bank with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Bank and LG Energy.
Diversification Opportunities for Jeju Bank and LG Energy
Excellent diversification
The 3 months correlation between Jeju and 373220 is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Bank 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 Jeju Bank 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 Jeju Bank 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 Jeju Bank i.e., Jeju Bank and LG Energy go up and down completely randomly.
Pair Corralation between Jeju Bank and LG Energy
Assuming the 90 days trading horizon Jeju Bank is expected to under-perform the LG Energy. But the stock apears to be less risky and, when comparing its historical volatility, Jeju Bank is 2.6 times less risky than LG Energy. The stock trades about -0.02 of its potential returns per unit of risk. The LG Energy Solution is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 41,650,000 in LG Energy Solution on August 28, 2024 and sell it today you would earn a total of 300,000 from holding LG Energy Solution or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Bank vs. LG Energy Solution
Performance |
| Timeline |
| Jeju Bank |
| LG Energy Solution |
Jeju Bank and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Bank and LG Energy
The main advantage of trading using opposite Jeju Bank and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Bank 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.| Jeju Bank vs. Miwon Chemicals Co | Jeju Bank vs. Nh Investment And | Jeju Bank vs. NH Investment Securities | Jeju Bank vs. SBI Investment KOREA |
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.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |