Correlation Between Industrial Bank and LG Energy
Can any of the company-specific risk be diversified away by investing in both Industrial 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 Industrial 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 Industrial Bank and LG Energy Solution, you can compare the effects of market volatilities on Industrial 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 Industrial Bank with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and LG Energy.
Diversification Opportunities for Industrial Bank and LG Energy
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Industrial and 373220 is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Industrial 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 Industrial 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 Industrial 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 Industrial Bank i.e., Industrial Bank and LG Energy go up and down completely randomly.
Pair Corralation between Industrial Bank and LG Energy
Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.54 times more return on investment than LG Energy. However, Industrial Bank is 1.86 times less risky than LG Energy. It trades about 0.07 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 1,242,447 in Industrial Bank on November 3, 2024 and sell it today you would earn a total of 310,553 from holding Industrial Bank or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Bank vs. LG Energy Solution
Performance |
| Timeline |
| Industrial Bank |
| LG Energy Solution |
Industrial Bank and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and LG Energy
The main advantage of trading using opposite Industrial Bank and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial 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.| Industrial Bank vs. Coloray International Investment | Industrial Bank vs. Infinitt Healthcare Co | Industrial Bank vs. DSC Investment | Industrial Bank vs. Tway Air Co |
| LG Energy vs. Korea Information Engineering | LG Energy vs. Alton Sports CoLtd | LG Energy vs. Lotte Data Communication | LG Energy vs. Barunson Entertainment Arts |
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.
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