Correlation Between LG Energy and Winix
Can any of the company-specific risk be diversified away by investing in both LG Energy and Winix 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 Winix 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 Winix Inc, you can compare the effects of market volatilities on LG Energy and Winix 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 Winix. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Winix.
Diversification Opportunities for LG Energy and Winix
Excellent diversification
The 3 months correlation between 373220 and Winix is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Winix Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Winix Inc 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 Winix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Winix Inc has no effect on the direction of LG Energy i.e., LG Energy and Winix go up and down completely randomly.
Pair Corralation between LG Energy and Winix
Assuming the 90 days trading horizon LG Energy Solution is expected to generate 1.93 times more return on investment than Winix. However, LG Energy is 1.93 times more volatile than Winix Inc. It trades about 0.01 of its potential returns per unit of risk. Winix Inc is currently generating about -0.43 per unit of risk. If you would invest 40,650,000 in LG Energy Solution on August 25, 2024 and sell it today you would lose (150,000) from holding LG Energy Solution or give up 0.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. Winix Inc
Performance |
| Timeline |
| LG Energy Solution |
| Winix Inc |
LG Energy and Winix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Winix
The main advantage of trading using opposite LG Energy and Winix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Winix 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 Winix will offset losses from the drop in Winix's long position.| LG Energy vs. Hana Financial | LG Energy vs. Dongbu Insurance Co | LG Energy vs. Jeju Bank | LG Energy vs. Ssangyong Information Communication |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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