Correlation Between LB Investment and LG Energy
Can any of the company-specific risk be diversified away by investing in both LB Investment 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 LB Investment and LG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Investment and LG Energy Solution, you can compare the effects of market volatilities on LB Investment 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 LB Investment with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Investment and LG Energy.
Diversification Opportunities for LB Investment and LG Energy
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 309960 and 373220 is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding LB Investment 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 LB Investment 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 LB Investment 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 LB Investment i.e., LB Investment and LG Energy go up and down completely randomly.
Pair Corralation between LB Investment and LG Energy
Assuming the 90 days trading horizon LB Investment is expected to generate 1.37 times more return on investment than LG Energy. However, LB Investment is 1.37 times more volatile than LG Energy Solution. It trades about -0.16 of its potential returns per unit of risk. LG Energy Solution is currently generating about -0.3 per unit of risk. If you would invest 370,000 in LB Investment on September 25, 2024 and sell it today you would lose (47,500) from holding LB Investment or give up 12.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LB Investment vs. LG Energy Solution
Performance |
| Timeline |
| LB Investment |
| LG Energy Solution |
LB Investment and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Investment and LG Energy
The main advantage of trading using opposite LB Investment and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Investment 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.| LB Investment vs. LG Household Healthcare | LB Investment vs. YG Entertainment | LB Investment vs. Aprogen Healthcare Games | LB Investment vs. iNtRON Biotechnology |
| LG Energy vs. Korean Reinsurance Co | LG Energy vs. LG Chemicals | LG Energy vs. Hannong Chemicals | LG Energy vs. Home Center Holdings |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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