Correlation Between LG Energy and KHVATEC CoLtd
Can any of the company-specific risk be diversified away by investing in both LG Energy and KHVATEC CoLtd 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 KHVATEC CoLtd 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 KHVATEC CoLtd, you can compare the effects of market volatilities on LG Energy and KHVATEC CoLtd 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 KHVATEC CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and KHVATEC CoLtd.
Diversification Opportunities for LG Energy and KHVATEC CoLtd
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 373220 and KHVATEC is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and KHVATEC CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KHVATEC CoLtd 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 KHVATEC CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KHVATEC CoLtd has no effect on the direction of LG Energy i.e., LG Energy and KHVATEC CoLtd go up and down completely randomly.
Pair Corralation between LG Energy and KHVATEC CoLtd
Assuming the 90 days trading horizon LG Energy Solution is expected to generate 1.47 times more return on investment than KHVATEC CoLtd. However, LG Energy is 1.47 times more volatile than KHVATEC CoLtd. It trades about 0.0 of its potential returns per unit of risk. KHVATEC CoLtd is currently generating about -0.12 per unit of risk. If you would invest 41,200,000 in LG Energy Solution on September 14, 2024 and sell it today you would lose (750,000) from holding LG Energy Solution or give up 1.82% 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. KHVATEC CoLtd
Performance |
| Timeline |
| LG Energy Solution |
| KHVATEC CoLtd |
LG Energy and KHVATEC CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and KHVATEC CoLtd
The main advantage of trading using opposite LG Energy and KHVATEC CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, KHVATEC CoLtd 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 KHVATEC CoLtd will offset losses from the drop in KHVATEC CoLtd'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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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