Correlation Between LG Energy and KT Hitel
Can any of the company-specific risk be diversified away by investing in both LG Energy and KT Hitel 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 KT Hitel 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 KT Hitel, you can compare the effects of market volatilities on LG Energy and KT Hitel 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 KT Hitel. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and KT Hitel.
Diversification Opportunities for LG Energy and KT Hitel
Average diversification
The 3 months correlation between 373220 and 036030 is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and KT Hitel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Hitel 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 KT Hitel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Hitel has no effect on the direction of LG Energy i.e., LG Energy and KT Hitel go up and down completely randomly.
Pair Corralation between LG Energy and KT Hitel
Assuming the 90 days trading horizon LG Energy Solution is expected to generate 1.04 times more return on investment than KT Hitel. However, LG Energy is 1.04 times more volatile than KT Hitel. It trades about 0.0 of its potential returns per unit of risk. KT Hitel is currently generating about -0.05 per unit of risk. If you would invest 43,050,000 in LG Energy Solution on September 3, 2024 and sell it today you would lose (3,900,000) from holding LG Energy Solution or give up 9.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. KT Hitel
Performance |
| Timeline |
| LG Energy Solution |
| KT Hitel |
LG Energy and KT Hitel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and KT Hitel
The main advantage of trading using opposite LG Energy and KT Hitel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, KT Hitel 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 KT Hitel will offset losses from the drop in KT Hitel's long position.| LG Energy vs. Doosan Heavy Ind | LG Energy vs. Korea Refract | LG Energy vs. Busan Industrial Co | LG Energy vs. Busan Ind |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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