Correlation Between LG Energy and Samhyun Steel
Can any of the company-specific risk be diversified away by investing in both LG Energy and Samhyun Steel 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 Samhyun Steel 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 Samhyun Steel Co, you can compare the effects of market volatilities on LG Energy and Samhyun Steel 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 Samhyun Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Samhyun Steel.
Diversification Opportunities for LG Energy and Samhyun Steel
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 373220 and Samhyun is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Samhyun Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhyun Steel 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 Samhyun Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhyun Steel has no effect on the direction of LG Energy i.e., LG Energy and Samhyun Steel go up and down completely randomly.
Pair Corralation between LG Energy and Samhyun Steel
Assuming the 90 days trading horizon LG Energy Solution is expected to generate 2.62 times more return on investment than Samhyun Steel. However, LG Energy is 2.62 times more volatile than Samhyun Steel Co. It trades about 0.01 of its potential returns per unit of risk. Samhyun Steel Co is currently generating about 0.0 per unit of risk. If you would invest 40,500,000 in LG Energy Solution on August 25, 2024 and sell it today you would earn a total of 0.00 from holding LG Energy Solution or generate 0.0% 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. Samhyun Steel Co
Performance |
| Timeline |
| LG Energy Solution |
| Samhyun Steel |
LG Energy and Samhyun Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Samhyun Steel
The main advantage of trading using opposite LG Energy and Samhyun Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Samhyun Steel 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 Samhyun Steel will offset losses from the drop in Samhyun Steel's long position.| LG Energy vs. Miwon Chemicals Co | LG Energy vs. Daiyang Metal Co | LG Energy vs. PJ Metal Co | LG Energy vs. Eagon Industrial Co |
| Samhyun Steel vs. Miwon Chemical | Samhyun Steel vs. Automobile Pc | Samhyun Steel vs. Digital Power Communications | Samhyun Steel vs. Hansol Chemical Co |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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