Correlation Between NOVATECH and LG Energy
Can any of the company-specific risk be diversified away by investing in both NOVATECH 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 NOVATECH and LG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NOVATECH Co and LG Energy Solution, you can compare the effects of market volatilities on NOVATECH 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 NOVATECH with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOVATECH and LG Energy.
Diversification Opportunities for NOVATECH and LG Energy
Pay attention - limited upside
The 3 months correlation between NOVATECH and 373220 is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding NOVATECH 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 NOVATECH 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 NOVATECH 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 NOVATECH i.e., NOVATECH and LG Energy go up and down completely randomly.
Pair Corralation between NOVATECH and LG Energy
Assuming the 90 days trading horizon NOVATECH Co is expected to generate 1.07 times more return on investment than LG Energy. However, NOVATECH is 1.07 times more volatile than LG Energy Solution. It trades about 0.6 of its potential returns per unit of risk. LG Energy Solution is currently generating about 0.06 per unit of risk. If you would invest 1,455,000 in NOVATECH Co on November 2, 2024 and sell it today you would earn a total of 484,000 from holding NOVATECH Co or generate 33.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NOVATECH Co vs. LG Energy Solution
Performance |
| Timeline |
| NOVATECH |
| LG Energy Solution |
NOVATECH and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NOVATECH and LG Energy
The main advantage of trading using opposite NOVATECH and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOVATECH 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.| NOVATECH vs. Ecopro BM Co | NOVATECH vs. Sangsin Energy Display | NOVATECH vs. Bosung Power Technology | NOVATECH vs. Busan Industrial Co |
| LG Energy vs. SCI Information Service | LG Energy vs. Insung Information Co | LG Energy vs. Seoul Food Industrial | LG Energy vs. DataSolution |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |