Correlation Between LG Energy and Cho Bi
Can any of the company-specific risk be diversified away by investing in both LG Energy and Cho Bi 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 LG Energy and Cho Bi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Energy Solution and Cho Bi Co, you can compare the effects of market volatilities on LG Energy and Cho Bi 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 LG Energy with a short position of Cho Bi. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Cho Bi.
Diversification Opportunities for LG Energy and Cho Bi
Very good diversification
The 3 months correlation between 373220 and Cho is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Cho Bi Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cho Bi and LG Energy 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 LG Energy Solution are associated (or correlated) with Cho Bi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cho Bi has no effect on the direction of LG Energy i.e., LG Energy and Cho Bi go up and down completely randomly.
Pair Corralation between LG Energy and Cho Bi
Assuming the 90 days trading horizon LG Energy Solution is expected to under-perform the Cho Bi. In addition to that, LG Energy is 1.6 times more volatile than Cho Bi Co. It trades about -0.01 of its total potential returns per unit of risk. Cho Bi Co is currently generating about 0.1 per unit of volatility. If you would invest 1,009,000 in Cho Bi Co on August 30, 2024 and sell it today you would earn a total of 49,000 from holding Cho Bi Co or generate 4.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. Cho Bi Co
Performance |
| Timeline |
| LG Energy Solution |
| Cho Bi |
LG Energy and Cho Bi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Cho Bi
The main advantage of trading using opposite LG Energy and Cho Bi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Cho Bi 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 Cho Bi will offset losses from the drop in Cho Bi's long position.| LG Energy vs. Daou Technology | LG Energy vs. RFTech Co | LG Energy vs. Hana Technology Co | LG Energy vs. Global Standard Technology |
| Cho Bi vs. NewFlex Technology Co | Cho Bi vs. Hanjoo Light Metal | Cho Bi vs. Ilji Technology Co | Cho Bi 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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