Correlation Between Korea Information and LG Energy
Can any of the company-specific risk be diversified away by investing in both Korea 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 Korea 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 Korea Information Engineering and LG Energy Solution, you can compare the effects of market volatilities on Korea 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 Korea Information with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and LG Energy.
Diversification Opportunities for Korea Information and LG Energy
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Korea and 373220 is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Engineering 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 Korea 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 Korea Information Engineering 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 Korea Information i.e., Korea Information and LG Energy go up and down completely randomly.
Pair Corralation between Korea Information and LG Energy
Assuming the 90 days trading horizon Korea Information Engineering is expected to generate 1.28 times more return on investment than LG Energy. However, Korea Information is 1.28 times more volatile than LG Energy Solution. It trades about 0.1 of its potential returns per unit of risk. LG Energy Solution is currently generating about -0.3 per unit of risk. If you would invest 240,500 in Korea Information Engineering on September 25, 2024 and sell it today you would earn a total of 15,500 from holding Korea Information Engineering or generate 6.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Korea Information Engineering vs. LG Energy Solution
Performance |
| Timeline |
| Korea Information |
| LG Energy Solution |
Korea Information and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and LG Energy
The main advantage of trading using opposite Korea Information and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea 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.| Korea Information vs. Dongsin Engineering Construction | Korea Information vs. Doosan Fuel Cell | Korea Information vs. Daishin Balance 1 | Korea Information vs. Total Soft Bank |
| LG Energy vs. System and Application | LG Energy vs. LB Investment | LG Energy vs. NICE Information Service | LG Energy vs. Korea Information Engineering |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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