Correlation Between LG Energy and Korea Gas
Can any of the company-specific risk be diversified away by investing in both LG Energy and Korea Gas 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 Gas 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 Gas, you can compare the effects of market volatilities on LG Energy and Korea Gas 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 Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Korea Gas.
Diversification Opportunities for LG Energy and Korea Gas
Very good diversification
The 3 months correlation between 373220 and Korea is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Korea Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Gas 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 Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Gas has no effect on the direction of LG Energy i.e., LG Energy and Korea Gas go up and down completely randomly.
Pair Corralation between LG Energy and Korea Gas
Assuming the 90 days trading horizon LG Energy Solution is expected to under-perform the Korea Gas. But the stock apears to be less risky and, when comparing its historical volatility, LG Energy Solution is 1.65 times less risky than Korea Gas. The stock trades about 0.0 of its potential returns per unit of risk. The Korea Gas is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,455,000 in Korea Gas on August 24, 2024 and sell it today you would earn a total of 2,190,000 from holding Korea Gas or generate 89.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
LG Energy Solution vs. Korea Gas
Performance |
| Timeline |
| LG Energy Solution |
| Korea Gas |
LG Energy and Korea Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Korea Gas
The main advantage of trading using opposite LG Energy and Korea Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Korea Gas 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 Gas will offset losses from the drop in Korea Gas' long position.| LG Energy vs. Hana Financial | LG Energy vs. Dongbu Insurance Co | LG Energy vs. Jeju Bank | LG Energy vs. Ssangyong Information Communication |
| Korea Gas vs. SS TECH | Korea Gas vs. QUALITAS SEMICONDUCTOR LTD | Korea Gas vs. BGF Retail Co | Korea Gas vs. Osang Healthcare Co,Ltd |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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