Correlation Between Dongnam Chemical and LG Energy
Can any of the company-specific risk be diversified away by investing in both Dongnam Chemical 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 Dongnam Chemical and LG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongnam Chemical Co and LG Energy Solution, you can compare the effects of market volatilities on Dongnam Chemical 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 Dongnam Chemical with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongnam Chemical and LG Energy.
Diversification Opportunities for Dongnam Chemical and LG Energy
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dongnam and 373220 is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dongnam Chemical 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 Dongnam Chemical 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 Dongnam Chemical 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 Dongnam Chemical i.e., Dongnam Chemical and LG Energy go up and down completely randomly.
Pair Corralation between Dongnam Chemical and LG Energy
Assuming the 90 days trading horizon Dongnam Chemical Co is expected to under-perform the LG Energy. But the stock apears to be less risky and, when comparing its historical volatility, Dongnam Chemical Co is 2.17 times less risky than LG Energy. The stock trades about -0.08 of its potential returns per unit of risk. The LG Energy Solution is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 44,600,000 in LG Energy Solution on September 21, 2024 and sell it today you would lose (7,400,000) from holding LG Energy Solution or give up 16.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongnam Chemical Co vs. LG Energy Solution
Performance |
| Timeline |
| Dongnam Chemical |
| LG Energy Solution |
Dongnam Chemical and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongnam Chemical and LG Energy
The main advantage of trading using opposite Dongnam Chemical and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongnam Chemical 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.| Dongnam Chemical vs. Samsung Electronics Co | Dongnam Chemical vs. Samsung Electronics Co | Dongnam Chemical vs. SK Hynix | Dongnam Chemical vs. POSCO Holdings |
| LG Energy vs. Dongnam Chemical Co | LG Energy vs. Lotte Fine Chemical | LG Energy vs. Miwon Chemical | LG Energy vs. Hannong Chemicals |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |