Correlation Between I Components and LG Energy
Can any of the company-specific risk be diversified away by investing in both I Components 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 I Components and LG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between i Components Co and LG Energy Solution, you can compare the effects of market volatilities on I Components 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 I Components with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of I Components and LG Energy.
Diversification Opportunities for I Components and LG Energy
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 059100 and 373220 is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding i Components 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 I Components 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 i Components 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 I Components i.e., I Components and LG Energy go up and down completely randomly.
Pair Corralation between I Components and LG Energy
Assuming the 90 days trading horizon i Components Co is expected to generate 1.02 times more return on investment than LG Energy. However, I Components is 1.02 times more volatile than LG Energy Solution. It trades about 0.34 of its potential returns per unit of risk. LG Energy Solution is currently generating about -0.34 per unit of risk. If you would invest 470,500 in i Components Co on October 14, 2024 and sell it today you would earn a total of 67,500 from holding i Components Co or generate 14.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
i Components Co vs. LG Energy Solution
Performance |
| Timeline |
| i Components |
| LG Energy Solution |
I Components and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with I Components and LG Energy
The main advantage of trading using opposite I Components and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I Components 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.| I Components vs. Atinum Investment Co | I Components vs. NICE Information Service | I Components vs. NH Investment Securities | I Components vs. Lotte Data Communication |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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