Correlation Between Lion Chemtech and LG Energy
Can any of the company-specific risk be diversified away by investing in both Lion Chemtech 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 Lion Chemtech and LG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Chemtech Co and LG Energy Solution, you can compare the effects of market volatilities on Lion Chemtech 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 Lion Chemtech with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Chemtech and LG Energy.
Diversification Opportunities for Lion Chemtech and LG Energy
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lion and 373220 is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Lion Chemtech 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 Lion Chemtech 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 Lion Chemtech 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 Lion Chemtech i.e., Lion Chemtech and LG Energy go up and down completely randomly.
Pair Corralation between Lion Chemtech and LG Energy
Assuming the 90 days trading horizon Lion Chemtech Co is expected to under-perform the LG Energy. In addition to that, Lion Chemtech is 1.0 times more volatile than LG Energy Solution. It trades about -0.04 of its total potential returns per unit of risk. LG Energy Solution is currently generating about 0.0 per unit of volatility. If you would invest 41,200,000 in LG Energy Solution on September 14, 2024 and sell it today you would lose (750,000) from holding LG Energy Solution or give up 1.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Chemtech Co vs. LG Energy Solution
Performance |
| Timeline |
| Lion Chemtech |
| LG Energy Solution |
Lion Chemtech and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Chemtech and LG Energy
The main advantage of trading using opposite Lion Chemtech and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Chemtech 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.| Lion Chemtech vs. Nature and Environment | Lion Chemtech vs. Cheryong Industrial CoLtd | Lion Chemtech vs. Solution Advanced Technology | Lion Chemtech vs. Busan Industrial Co |
| LG Energy vs. Samyang Foods Co | LG Energy vs. FoodNamoo | LG Energy vs. PNC Technologies co | LG Energy vs. Lion Chemtech 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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