Correlation Between Samsung Life and LG Energy
Can any of the company-specific risk be diversified away by investing in both Samsung Life 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 Samsung Life and LG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Life Insurance and LG Energy Solution, you can compare the effects of market volatilities on Samsung Life 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 Samsung Life with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Life and LG Energy.
Diversification Opportunities for Samsung Life and LG Energy
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and 373220 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Life Insurance 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 Samsung Life 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 Samsung Life Insurance 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 Samsung Life i.e., Samsung Life and LG Energy go up and down completely randomly.
Pair Corralation between Samsung Life and LG Energy
Assuming the 90 days trading horizon Samsung Life Insurance is expected to under-perform the LG Energy. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Life Insurance is 1.47 times less risky than LG Energy. The stock trades about -0.48 of its potential returns per unit of risk. The LG Energy Solution is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 34,800,000 in LG Energy Solution on October 30, 2024 and sell it today you would earn a total of 550,000 from holding LG Energy Solution or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Life Insurance vs. LG Energy Solution
Performance |
| Timeline |
| Samsung Life Insurance |
| LG Energy Solution |
Samsung Life and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Life and LG Energy
The main advantage of trading using opposite Samsung Life and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Life 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.| Samsung Life vs. Youngchang Chemical Co | Samsung Life vs. Tae Kyung Chemical | Samsung Life vs. DB Insurance Co | Samsung Life vs. Dgb Financial |
| LG Energy vs. ECSTELECOM Co | LG Energy vs. Seoul Electronics Telecom | LG Energy vs. Insun Environment New | LG Energy vs. Daehan Steel |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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