Correlation Between Osang Healthcare and LG Energy
Can any of the company-specific risk be diversified away by investing in both Osang Healthcare 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 Osang Healthcare and LG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Osang Healthcare Co,Ltd and LG Energy Solution, you can compare the effects of market volatilities on Osang Healthcare 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 Osang Healthcare with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Osang Healthcare and LG Energy.
Diversification Opportunities for Osang Healthcare and LG Energy
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Osang and 373220 is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Osang Healthcare Co,Ltd 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 Osang Healthcare 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 Osang Healthcare Co,Ltd 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 Osang Healthcare i.e., Osang Healthcare and LG Energy go up and down completely randomly.
Pair Corralation between Osang Healthcare and LG Energy
Assuming the 90 days trading horizon Osang Healthcare Co,Ltd is expected to under-perform the LG Energy. In addition to that, Osang Healthcare is 1.34 times more volatile than LG Energy Solution. It trades about -0.02 of its total potential returns per unit of risk. LG Energy Solution is currently generating about 0.05 per unit of volatility. If you would invest 33,650,000 in LG Energy Solution on September 2, 2024 and sell it today you would earn a total of 4,500,000 from holding LG Energy Solution or generate 13.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Osang Healthcare Co,Ltd vs. LG Energy Solution
Performance |
| Timeline |
| Osang Healthcare Co,Ltd |
| LG Energy Solution |
Osang Healthcare and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Osang Healthcare and LG Energy
The main advantage of trading using opposite Osang Healthcare and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Osang Healthcare 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.| Osang Healthcare vs. Samsung Electronics Co | Osang Healthcare vs. Samsung Electronics Co | Osang Healthcare vs. LG Energy Solution | Osang Healthcare vs. SK Hynix |
| LG Energy vs. Daishin Information Communications | LG Energy vs. Digital Power Communications | LG Energy vs. Ssangyong Information Communication | LG Energy vs. Korean Reinsurance 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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