Correlation Between LG Energy and Hotel Shilla
Can any of the company-specific risk be diversified away by investing in both LG Energy and Hotel Shilla 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 Hotel Shilla 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 Hotel Shilla Co, you can compare the effects of market volatilities on LG Energy and Hotel Shilla 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 Hotel Shilla. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Hotel Shilla.
Diversification Opportunities for LG Energy and Hotel Shilla
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 373220 and Hotel is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Hotel Shilla Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Shilla 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 Hotel Shilla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Shilla has no effect on the direction of LG Energy i.e., LG Energy and Hotel Shilla go up and down completely randomly.
Pair Corralation between LG Energy and Hotel Shilla
Assuming the 90 days trading horizon LG Energy Solution is expected to generate 3.95 times more return on investment than Hotel Shilla. However, LG Energy is 3.95 times more volatile than Hotel Shilla Co. It trades about 0.07 of its potential returns per unit of risk. Hotel Shilla Co is currently generating about -0.14 per unit of risk. If you would invest 35,000,000 in LG Energy Solution on October 25, 2024 and sell it today you would earn a total of 1,000,000 from holding LG Energy Solution or generate 2.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
LG Energy Solution vs. Hotel Shilla Co
Performance |
Timeline |
LG Energy Solution |
Hotel Shilla |
LG Energy and Hotel Shilla Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LG Energy and Hotel Shilla
The main advantage of trading using opposite LG Energy and Hotel Shilla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Hotel Shilla 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 Hotel Shilla will offset losses from the drop in Hotel Shilla's long position.LG Energy vs. Lion Chemtech Co | LG Energy vs. PJ Metal Co | LG Energy vs. V One Tech Co | LG Energy vs. Raontech |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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