Correlation Between LG Energy and SOLiD
Can any of the company-specific risk be diversified away by investing in both LG Energy and SOLiD 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 SOLiD 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 SOLiD Inc, you can compare the effects of market volatilities on LG Energy and SOLiD 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 SOLiD. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and SOLiD.
Diversification Opportunities for LG Energy and SOLiD
Good diversification
The 3 months correlation between 373220 and SOLiD is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and SOLiD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOLiD 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 SOLiD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOLiD Inc has no effect on the direction of LG Energy i.e., LG Energy and SOLiD go up and down completely randomly.
Pair Corralation between LG Energy and SOLiD
Assuming the 90 days trading horizon LG Energy Solution is expected to generate 1.0 times more return on investment than SOLiD. However, LG Energy Solution is 1.0 times less risky than SOLiD. It trades about 0.0 of its potential returns per unit of risk. SOLiD Inc is currently generating about 0.0 per unit of risk. If you would invest 42,600,000 in LG Energy Solution on September 14, 2024 and sell it today you would lose (2,150,000) from holding LG Energy Solution or give up 5.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.59% |
| Values | Daily Returns |
LG Energy Solution vs. SOLiD Inc
Performance |
| Timeline |
| LG Energy Solution |
| SOLiD Inc |
LG Energy and SOLiD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and SOLiD
The main advantage of trading using opposite LG Energy and SOLiD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, SOLiD 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 SOLiD will offset losses from the drop in SOLiD'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 |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |