Correlation Between LG Energy and Atec
Can any of the company-specific risk be diversified away by investing in both LG Energy and Atec 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 Atec 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 Atec Co, you can compare the effects of market volatilities on LG Energy and Atec 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 Atec. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Atec.
Diversification Opportunities for LG Energy and Atec
Very good diversification
The 3 months correlation between 373220 and Atec is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Atec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atec 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 Atec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atec has no effect on the direction of LG Energy i.e., LG Energy and Atec go up and down completely randomly.
Pair Corralation between LG Energy and Atec
Assuming the 90 days trading horizon LG Energy is expected to generate 50.41 times less return on investment than Atec. But when comparing it to its historical volatility, LG Energy Solution is 2.24 times less risky than Atec. It trades about 0.0 of its potential returns per unit of risk. Atec Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,287,830 in Atec Co on September 14, 2024 and sell it today you would earn a total of 2,107,170 from holding Atec Co or generate 163.62% 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. Atec Co
Performance |
| Timeline |
| LG Energy Solution |
| Atec |
LG Energy and Atec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Atec
The main advantage of trading using opposite LG Energy and Atec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Atec 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 Atec will offset losses from the drop in Atec's long position.| LG Energy vs. Samyang Foods Co | LG Energy vs. FoodNamoo | LG Energy vs. PNC Technologies co | LG Energy vs. Lion Chemtech Co |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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