Correlation Between LG Energy and Interflex
Can any of the company-specific risk be diversified away by investing in both LG Energy and Interflex 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 Interflex 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 Interflex Co, you can compare the effects of market volatilities on LG Energy and Interflex 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 Interflex. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Interflex.
Diversification Opportunities for LG Energy and Interflex
Weak diversification
The 3 months correlation between 373220 and Interflex is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Interflex Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interflex 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 Interflex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interflex has no effect on the direction of LG Energy i.e., LG Energy and Interflex go up and down completely randomly.
Pair Corralation between LG Energy and Interflex
Assuming the 90 days trading horizon LG Energy Solution is expected to under-perform the Interflex. But the stock apears to be less risky and, when comparing its historical volatility, LG Energy Solution is 1.24 times less risky than Interflex. The stock trades about -0.02 of its potential returns per unit of risk. The Interflex Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,051,000 in Interflex Co on September 12, 2024 and sell it today you would lose (234,000) from holding Interflex Co or give up 22.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. Interflex Co
Performance |
| Timeline |
| LG Energy Solution |
| Interflex |
LG Energy and Interflex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Interflex
The main advantage of trading using opposite LG Energy and Interflex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Interflex 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 Interflex will offset losses from the drop in Interflex'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 |
| Interflex vs. Cube Entertainment | Interflex vs. Dreamus Company | Interflex vs. LG Energy Solution | Interflex vs. Dongwon System |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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