Correlation Between LG Energy and Korea Electric
Can any of the company-specific risk be diversified away by investing in both LG Energy and Korea Electric 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 Korea Electric 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 Korea Electric Power, you can compare the effects of market volatilities on LG Energy and Korea Electric 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 Korea Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Korea Electric.
Diversification Opportunities for LG Energy and Korea Electric
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between 373220 and Korea is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Korea Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Electric Power 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 Korea Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Electric Power has no effect on the direction of LG Energy i.e., LG Energy and Korea Electric go up and down completely randomly.
Pair Corralation between LG Energy and Korea Electric
Assuming the 90 days trading horizon LG Energy Solution is expected to under-perform the Korea Electric. In addition to that, LG Energy is 1.44 times more volatile than Korea Electric Power. It trades about -0.03 of its total potential returns per unit of risk. Korea Electric Power is currently generating about 0.04 per unit of volatility. If you would invest 1,931,000 in Korea Electric Power on August 31, 2024 and sell it today you would earn a total of 459,000 from holding Korea Electric Power or generate 23.77% 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. Korea Electric Power
Performance |
| Timeline |
| LG Energy Solution |
| Korea Electric Power |
LG Energy and Korea Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Korea Electric
The main advantage of trading using opposite LG Energy and Korea Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Korea Electric 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 Korea Electric will offset losses from the drop in Korea Electric's long position.| LG Energy vs. Ilji Technology Co | LG Energy vs. AurosTechnology | LG Energy vs. Osang Healthcare Co,Ltd | LG Energy vs. Hana Technology Co |
| Korea Electric vs. Busan Industrial Co | Korea Electric vs. Busan Ind | Korea Electric vs. Mirae Asset Daewoo | Korea Electric vs. Finebesteel |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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