Correlation Between LG Energy and Sajo Seafood
Can any of the company-specific risk be diversified away by investing in both LG Energy and Sajo Seafood 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 Sajo Seafood 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 Sajo Seafood, you can compare the effects of market volatilities on LG Energy and Sajo Seafood 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 Sajo Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Sajo Seafood.
Diversification Opportunities for LG Energy and Sajo Seafood
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 373220 and Sajo is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Sajo Seafood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sajo Seafood 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 Sajo Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sajo Seafood has no effect on the direction of LG Energy i.e., LG Energy and Sajo Seafood go up and down completely randomly.
Pair Corralation between LG Energy and Sajo Seafood
Assuming the 90 days trading horizon LG Energy Solution is expected to under-perform the Sajo Seafood. In addition to that, LG Energy is 1.72 times more volatile than Sajo Seafood. It trades about -0.23 of its total potential returns per unit of risk. Sajo Seafood is currently generating about -0.14 per unit of volatility. If you would invest 473,500 in Sajo Seafood on October 17, 2024 and sell it today you would lose (17,500) from holding Sajo Seafood or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. Sajo Seafood
Performance |
| Timeline |
| LG Energy Solution |
| Sajo Seafood |
LG Energy and Sajo Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Sajo Seafood
The main advantage of trading using opposite LG Energy and Sajo Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Sajo Seafood 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 Sajo Seafood will offset losses from the drop in Sajo Seafood's long position.| LG Energy vs. KB Financial Group | LG Energy vs. Woori Financial Group | LG Energy vs. DB Financial Investment | LG Energy vs. PJ Metal Co |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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