Correlation Between LIG-ES SPAC and Hyosung Chemical
Can any of the company-specific risk be diversified away by investing in both LIG-ES SPAC and Hyosung Chemical 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 SPAC and Hyosung Chemical 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 Hyosung Chemical Corp, you can compare the effects of market volatilities on LIG-ES SPAC and Hyosung Chemical 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 SPAC with a short position of Hyosung Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIG-ES SPAC and Hyosung Chemical.
Diversification Opportunities for LIG-ES SPAC and Hyosung Chemical
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LIG-ES and Hyosung is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding LIG ES SPAC and Hyosung Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyosung Chemical Corp and LIG-ES SPAC 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 Hyosung Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyosung Chemical Corp has no effect on the direction of LIG-ES SPAC i.e., LIG-ES SPAC and Hyosung Chemical go up and down completely randomly.
Pair Corralation between LIG-ES SPAC and Hyosung Chemical
Assuming the 90 days trading horizon LIG ES SPAC is expected to generate 0.99 times more return on investment than Hyosung Chemical. However, LIG ES SPAC is 1.01 times less risky than Hyosung Chemical. It trades about -0.06 of its potential returns per unit of risk. Hyosung Chemical Corp is currently generating about -0.08 per unit of risk. If you would invest 710,000 in LIG ES SPAC on September 12, 2024 and sell it today you would lose (398,000) from holding LIG ES SPAC or give up 56.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIG ES SPAC vs. Hyosung Chemical Corp
Performance |
| Timeline |
| LIG ES SPAC |
| Hyosung Chemical Corp |
LIG-ES SPAC and Hyosung Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIG-ES SPAC and Hyosung Chemical
The main advantage of trading using opposite LIG-ES SPAC and Hyosung Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIG-ES SPAC position performs unexpectedly, Hyosung Chemical 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 Hyosung Chemical will offset losses from the drop in Hyosung Chemical's long position.| LIG-ES SPAC vs. LG Chem | LIG-ES SPAC vs. Chunbo Co | LIG-ES SPAC vs. DukSan Neolux CoLtd | LIG-ES SPAC vs. Hyosung Chemical Corp |
| Hyosung Chemical vs. LG Chem | Hyosung Chemical vs. Chunbo Co | Hyosung Chemical vs. DukSan Neolux CoLtd | Hyosung Chemical vs. LIG ES SPAC |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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