Correlation Between LG Energy and Wonbang Tech
Can any of the company-specific risk be diversified away by investing in both LG Energy and Wonbang Tech 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 Wonbang Tech 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 Wonbang Tech Co, you can compare the effects of market volatilities on LG Energy and Wonbang Tech 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 Wonbang Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Wonbang Tech.
Diversification Opportunities for LG Energy and Wonbang Tech
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 373220 and Wonbang is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Wonbang Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonbang Tech 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 Wonbang Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonbang Tech has no effect on the direction of LG Energy i.e., LG Energy and Wonbang Tech go up and down completely randomly.
Pair Corralation between LG Energy and Wonbang Tech
Assuming the 90 days trading horizon LG Energy Solution is expected to generate 0.64 times more return on investment than Wonbang Tech. However, LG Energy Solution is 1.57 times less risky than Wonbang Tech. It trades about -0.02 of its potential returns per unit of risk. Wonbang Tech Co is currently generating about -0.05 per unit of risk. If you would invest 49,350,000 in LG Energy Solution on September 1, 2024 and sell it today you would lose (11,200,000) from holding LG Energy Solution or give up 22.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. Wonbang Tech Co
Performance |
| Timeline |
| LG Energy Solution |
| Wonbang Tech |
LG Energy and Wonbang Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Wonbang Tech
The main advantage of trading using opposite LG Energy and Wonbang Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Wonbang Tech 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 Wonbang Tech will offset losses from the drop in Wonbang Tech's long position.| LG Energy vs. Doosan Heavy Ind | LG Energy vs. Hyosung Heavy Industries | LG Energy vs. Aprogen KIC | LG Energy vs. SNTEnergy Co |
| Wonbang Tech vs. Kukdong Oil Chemicals | Wonbang Tech vs. Hana Financial | Wonbang Tech vs. Total Soft Bank | Wonbang Tech vs. Koryo Credit Information |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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