Correlation Between LG Energy and Nuintek CoLtd
Can any of the company-specific risk be diversified away by investing in both LG Energy and Nuintek CoLtd 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 Nuintek CoLtd 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 Nuintek CoLtd, you can compare the effects of market volatilities on LG Energy and Nuintek CoLtd 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 Nuintek CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Nuintek CoLtd.
Diversification Opportunities for LG Energy and Nuintek CoLtd
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 373220 and Nuintek is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Nuintek CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuintek CoLtd 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 Nuintek CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuintek CoLtd has no effect on the direction of LG Energy i.e., LG Energy and Nuintek CoLtd go up and down completely randomly.
Pair Corralation between LG Energy and Nuintek CoLtd
Assuming the 90 days trading horizon LG Energy Solution is expected to generate 1.98 times more return on investment than Nuintek CoLtd. However, LG Energy is 1.98 times more volatile than Nuintek CoLtd. It trades about -0.08 of its potential returns per unit of risk. Nuintek CoLtd is currently generating about -0.21 per unit of risk. If you would invest 41,600,000 in LG Energy Solution on September 12, 2024 and sell it today you would lose (3,100,000) from holding LG Energy Solution or give up 7.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. Nuintek CoLtd
Performance |
| Timeline |
| LG Energy Solution |
| Nuintek CoLtd |
LG Energy and Nuintek CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Nuintek CoLtd
The main advantage of trading using opposite LG Energy and Nuintek CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Nuintek CoLtd 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 Nuintek CoLtd will offset losses from the drop in Nuintek CoLtd's long position.| LG Energy vs. Bohae Brewery | LG Energy vs. Hanjin Transportation Co | LG Energy vs. Daehan Steel | LG Energy vs. Lotte Chilsung Beverage |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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