Correlation Between LG Energy and Daou Data
Can any of the company-specific risk be diversified away by investing in both LG Energy and Daou Data 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 Daou Data 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 Daou Data Corp, you can compare the effects of market volatilities on LG Energy and Daou Data 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 Daou Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Daou Data.
Diversification Opportunities for LG Energy and Daou Data
Poor diversification
The 3 months correlation between 373220 and Daou is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Daou Data Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daou Data Corp 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 Daou Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daou Data Corp has no effect on the direction of LG Energy i.e., LG Energy and Daou Data go up and down completely randomly.
Pair Corralation between LG Energy and Daou Data
Assuming the 90 days trading horizon LG Energy Solution is expected to generate 0.9 times more return on investment than Daou Data. However, LG Energy Solution is 1.11 times less risky than Daou Data. It trades about -0.02 of its potential returns per unit of risk. Daou Data Corp is currently generating about -0.09 per unit of risk. If you would invest 58,000,000 in LG Energy Solution on November 27, 2024 and sell it today you would lose (19,450,000) from holding LG Energy Solution or give up 33.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. Daou Data Corp
Performance |
| Timeline |
| LG Energy Solution |
| Daou Data Corp |
LG Energy and Daou Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Daou Data
The main advantage of trading using opposite LG Energy and Daou Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Daou Data 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 Daou Data will offset losses from the drop in Daou Data's long position.| LG Energy vs. Worldex Industry Trading | LG Energy vs. Aju IB Investment | LG Energy vs. Hana Financial | LG Energy vs. Jeju Bank |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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