Correlation Between Green Cross and LG Energy
Can any of the company-specific risk be diversified away by investing in both Green Cross 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 Green Cross and LG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Cross Medical and LG Energy Solution, you can compare the effects of market volatilities on Green Cross 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 Green Cross with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Cross and LG Energy.
Diversification Opportunities for Green Cross and LG Energy
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Green and 373220 is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Green Cross Medical 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 Green Cross 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 Green Cross Medical 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 Green Cross i.e., Green Cross and LG Energy go up and down completely randomly.
Pair Corralation between Green Cross and LG Energy
Assuming the 90 days trading horizon Green Cross Medical is expected to generate 1.18 times more return on investment than LG Energy. However, Green Cross is 1.18 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 414,000 in Green Cross Medical on November 8, 2024 and sell it today you would lose (39,500) from holding Green Cross Medical or give up 9.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Green Cross Medical vs. LG Energy Solution
Performance |
| Timeline |
| Green Cross Medical |
| LG Energy Solution |
Green Cross and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Cross and LG Energy
The main advantage of trading using opposite Green Cross and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Cross 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.| Green Cross vs. Samsung Electronics Co | Green Cross vs. Samsung Electronics Co | Green Cross vs. KB Financial Group | Green Cross vs. Shinhan Financial Group |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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