Correlation Between NICE Information and LG Energy
Can any of the company-specific risk be diversified away by investing in both NICE Information 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 NICE Information and LG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NICE Information Service and LG Energy Solution, you can compare the effects of market volatilities on NICE Information 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 NICE Information with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NICE Information and LG Energy.
Diversification Opportunities for NICE Information and LG Energy
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NICE and 373220 is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding NICE Information Service 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 NICE Information 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 NICE Information Service 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 NICE Information i.e., NICE Information and LG Energy go up and down completely randomly.
Pair Corralation between NICE Information and LG Energy
Assuming the 90 days trading horizon NICE Information Service is expected to generate 0.78 times more return on investment than LG Energy. However, NICE Information Service is 1.29 times less risky than LG Energy. It trades about 0.01 of its potential returns per unit of risk. LG Energy Solution is currently generating about -0.01 per unit of risk. If you would invest 1,203,035 in NICE Information Service on October 14, 2024 and sell it today you would lose (53,035) from holding NICE Information Service or give up 4.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NICE Information Service vs. LG Energy Solution
Performance |
| Timeline |
| NICE Information Service |
| LG Energy Solution |
NICE Information and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NICE Information and LG Energy
The main advantage of trading using opposite NICE Information and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NICE Information 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.| NICE Information vs. Nice Information Telecommunication | NICE Information vs. Ssangyong Information Communication | NICE Information vs. Lotte Data Communication | NICE Information vs. KT Submarine Telecom |
| LG Energy vs. Lotte Non Life Insurance | LG Energy vs. Jeju Air Co | LG Energy vs. Shinhan Financial Group | LG Energy vs. Jin Air Co |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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