Correlation Between Phoenix Materials and LG Energy
Can any of the company-specific risk be diversified away by investing in both Phoenix Materials 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 Phoenix Materials and LG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phoenix Materials Co and LG Energy Solution, you can compare the effects of market volatilities on Phoenix Materials 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 Phoenix Materials with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phoenix Materials and LG Energy.
Diversification Opportunities for Phoenix Materials and LG Energy
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Phoenix and 373220 is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Phoenix Materials Co 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 Phoenix Materials 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 Phoenix Materials Co 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 Phoenix Materials i.e., Phoenix Materials and LG Energy go up and down completely randomly.
Pair Corralation between Phoenix Materials and LG Energy
Assuming the 90 days trading horizon Phoenix Materials Co is expected to generate 1.12 times more return on investment than LG Energy. However, Phoenix Materials is 1.12 times more volatile than LG Energy Solution. It trades about -0.03 of its potential returns per unit of risk. LG Energy Solution is currently generating about -0.07 per unit of risk. If you would invest 83,900 in Phoenix Materials Co on October 14, 2024 and sell it today you would lose (7,900) from holding Phoenix Materials Co or give up 9.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Phoenix Materials Co vs. LG Energy Solution
Performance |
| Timeline |
| Phoenix Materials |
| LG Energy Solution |
Phoenix Materials and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phoenix Materials and LG Energy
The main advantage of trading using opposite Phoenix Materials and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phoenix Materials 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.| Phoenix Materials vs. Nasmedia Co | Phoenix Materials vs. Barunson Entertainment Arts | Phoenix Materials vs. J Steel Co | Phoenix Materials vs. MediaZen |
| LG Energy vs. Hyundai Engineering Plastics | LG Energy vs. MediaZen | LG Energy vs. LAKE MATERIALS LTD | LG Energy vs. Phoenix Materials 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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