Correlation Between LG Energy and Polaris Office
Can any of the company-specific risk be diversified away by investing in both LG Energy and Polaris Office 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 Polaris Office 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 Polaris Office Corp, you can compare the effects of market volatilities on LG Energy and Polaris Office 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 Polaris Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Polaris Office.
Diversification Opportunities for LG Energy and Polaris Office
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 373220 and Polaris is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Polaris Office Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polaris Office 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 Polaris Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polaris Office Corp has no effect on the direction of LG Energy i.e., LG Energy and Polaris Office go up and down completely randomly.
Pair Corralation between LG Energy and Polaris Office
Assuming the 90 days trading horizon LG Energy Solution is expected to under-perform the Polaris Office. But the stock apears to be less risky and, when comparing its historical volatility, LG Energy Solution is 2.07 times less risky than Polaris Office. The stock trades about -0.02 of its potential returns per unit of risk. The Polaris Office Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 505,000 in Polaris Office Corp on September 12, 2024 and sell it today you would earn a total of 61,000 from holding Polaris Office Corp or generate 12.08% 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. Polaris Office Corp
Performance |
| Timeline |
| LG Energy Solution |
| Polaris Office Corp |
LG Energy and Polaris Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Polaris Office
The main advantage of trading using opposite LG Energy and Polaris Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Polaris Office 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 Polaris Office will offset losses from the drop in Polaris Office's long position.| LG Energy vs. Bohae Brewery | LG Energy vs. Hanjin Transportation Co | LG Energy vs. Daehan Steel | LG Energy vs. Lotte Chilsung Beverage |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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