Correlation Between FoodNamoo and LG Energy
Can any of the company-specific risk be diversified away by investing in both FoodNamoo 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 FoodNamoo and LG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FoodNamoo and LG Energy Solution, you can compare the effects of market volatilities on FoodNamoo 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 FoodNamoo with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of FoodNamoo and LG Energy.
Diversification Opportunities for FoodNamoo and LG Energy
Modest diversification
The 3 months correlation between FoodNamoo and 373220 is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding FoodNamoo 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 FoodNamoo 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 FoodNamoo 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 FoodNamoo i.e., FoodNamoo and LG Energy go up and down completely randomly.
Pair Corralation between FoodNamoo and LG Energy
Assuming the 90 days trading horizon FoodNamoo is expected to generate 0.87 times more return on investment than LG Energy. However, FoodNamoo is 1.15 times less risky than LG Energy. It trades about 0.16 of its potential returns per unit of risk. LG Energy Solution is currently generating about 0.0 per unit of risk. If you would invest 299,000 in FoodNamoo on September 14, 2024 and sell it today you would earn a total of 33,000 from holding FoodNamoo or generate 11.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FoodNamoo vs. LG Energy Solution
Performance |
| Timeline |
| FoodNamoo |
| LG Energy Solution |
FoodNamoo and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FoodNamoo and LG Energy
The main advantage of trading using opposite FoodNamoo and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FoodNamoo 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.| FoodNamoo vs. Maeil Dairies Co | FoodNamoo vs. HYUNDAI FEED | FoodNamoo vs. Neo Cremar Co | FoodNamoo vs. Dongwoo Farm To |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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