Correlation Between LIG ES and LG Chem
Can any of the company-specific risk be diversified away by investing in both LIG ES and LG Chem 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 LIG ES and LG Chem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIG ES SPAC and LG Chem, you can compare the effects of market volatilities on LIG ES and LG Chem 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 LIG ES with a short position of LG Chem. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIG ES and LG Chem.
Diversification Opportunities for LIG ES and LG Chem
Very good diversification
The 3 months correlation between LIG and 051915 is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding LIG ES SPAC and LG Chem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chem and LIG ES 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 LIG ES SPAC are associated (or correlated) with LG Chem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chem has no effect on the direction of LIG ES i.e., LIG ES and LG Chem go up and down completely randomly.
Pair Corralation between LIG ES and LG Chem
Assuming the 90 days trading horizon LIG ES SPAC is expected to generate 1.52 times more return on investment than LG Chem. However, LIG ES is 1.52 times more volatile than LG Chem. It trades about -0.14 of its potential returns per unit of risk. LG Chem is currently generating about -0.23 per unit of risk. If you would invest 488,500 in LIG ES SPAC on October 29, 2024 and sell it today you would lose (45,500) from holding LIG ES SPAC or give up 9.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIG ES SPAC vs. LG Chem
Performance |
| Timeline |
| LIG ES SPAC |
| LG Chem |
LIG ES and LG Chem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIG ES and LG Chem
The main advantage of trading using opposite LIG ES and LG Chem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIG ES position performs unexpectedly, LG Chem 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 Chem will offset losses from the drop in LG Chem's long position.| LIG ES vs. Pureun Mutual Savings | LIG ES vs. Aprogen Healthcare Games | LIG ES vs. Dgb Financial | LIG ES vs. KB Financial Group |
| LG Chem vs. Ssangyong Information Communication | LG Chem vs. Atinum Investment Co | LG Chem vs. Koryo Credit Information | LG Chem vs. Daol Investment Securities |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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