Correlation Between LG Energy and KMH Hitech
Can any of the company-specific risk be diversified away by investing in both LG Energy and KMH Hitech 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 KMH Hitech 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 KMH Hitech Co, you can compare the effects of market volatilities on LG Energy and KMH Hitech 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 KMH Hitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and KMH Hitech.
Diversification Opportunities for LG Energy and KMH Hitech
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 373220 and KMH is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and KMH Hitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMH Hitech 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 KMH Hitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMH Hitech has no effect on the direction of LG Energy i.e., LG Energy and KMH Hitech go up and down completely randomly.
Pair Corralation between LG Energy and KMH Hitech
Assuming the 90 days trading horizon LG Energy Solution is expected to under-perform the KMH Hitech. In addition to that, LG Energy is 1.31 times more volatile than KMH Hitech Co. It trades about -0.14 of its total potential returns per unit of risk. KMH Hitech Co is currently generating about -0.08 per unit of volatility. If you would invest 88,000 in KMH Hitech Co on September 13, 2024 and sell it today you would lose (4,500) from holding KMH Hitech Co or give up 5.11% 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. KMH Hitech Co
Performance |
| Timeline |
| LG Energy Solution |
| KMH Hitech |
LG Energy and KMH Hitech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and KMH Hitech
The main advantage of trading using opposite LG Energy and KMH Hitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, KMH Hitech 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 KMH Hitech will offset losses from the drop in KMH Hitech's long position.| LG Energy vs. Daejung Chemicals Metals | LG Energy vs. Youngsin Metal Industrial | LG Energy vs. Seoul Electronics Telecom | LG Energy vs. ITM Semiconductor Co |
| KMH Hitech vs. Cube Entertainment | KMH Hitech vs. Dreamus Company | KMH Hitech vs. LG Energy Solution | KMH Hitech 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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