Correlation Between GS Retail and LG Energy
Can any of the company-specific risk be diversified away by investing in both GS Retail 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 GS Retail and LG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GS Retail Co and LG Energy Solution, you can compare the effects of market volatilities on GS Retail 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 GS Retail with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GS Retail and LG Energy.
Diversification Opportunities for GS Retail and LG Energy
Poor diversification
The 3 months correlation between 007070 and 373220 is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding GS Retail Co 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 GS Retail 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 GS Retail Co 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 GS Retail i.e., GS Retail and LG Energy go up and down completely randomly.
Pair Corralation between GS Retail and LG Energy
Assuming the 90 days trading horizon GS Retail Co is expected to under-perform the LG Energy. In addition to that, GS Retail is 1.0 times more volatile than LG Energy Solution. It trades about -0.39 of its total potential returns per unit of risk. LG Energy Solution is currently generating about -0.24 per unit of volatility. If you would invest 39,800,000 in LG Energy Solution on October 17, 2024 and sell it today you would lose (4,000,000) from holding LG Energy Solution or give up 10.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 73.68% |
| Values | Daily Returns |
GS Retail Co vs. LG Energy Solution
Performance |
| Timeline |
| GS Retail |
| LG Energy Solution |
GS Retail and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GS Retail and LG Energy
The main advantage of trading using opposite GS Retail and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GS Retail 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.| GS Retail vs. Iljin Display | GS Retail vs. SeAH Besteel Corp | GS Retail vs. BGF Retail Co | GS Retail vs. Dong A Steel Technology |
| LG Energy vs. Pureun Mutual Savings | LG Energy vs. GS Retail Co | LG Energy vs. LG Chemicals | LG Energy vs. Samsung Life Insurance |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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