Correlation Between LG Energy and Global Standard
Can any of the company-specific risk be diversified away by investing in both LG Energy and Global Standard 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 Global Standard 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 Global Standard Technology, you can compare the effects of market volatilities on LG Energy and Global Standard 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 Global Standard. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Global Standard.
Diversification Opportunities for LG Energy and Global Standard
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 373220 and Global is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Global Standard Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Standard 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 Global Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Standard Tech has no effect on the direction of LG Energy i.e., LG Energy and Global Standard go up and down completely randomly.
Pair Corralation between LG Energy and Global Standard
Assuming the 90 days trading horizon LG Energy Solution is expected to under-perform the Global Standard. But the stock apears to be less risky and, when comparing its historical volatility, LG Energy Solution is 1.14 times less risky than Global Standard. The stock trades about -0.14 of its potential returns per unit of risk. The Global Standard Technology is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,443,000 in Global Standard Technology on September 13, 2024 and sell it today you would earn a total of 128,000 from holding Global Standard Technology or generate 8.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. Global Standard Technology
Performance |
| Timeline |
| LG Energy Solution |
| Global Standard Tech |
LG Energy and Global Standard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Global Standard
The main advantage of trading using opposite LG Energy and Global Standard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Global Standard 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 Global Standard will offset losses from the drop in Global Standard'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 |
| Global Standard vs. Cube Entertainment | Global Standard vs. Dreamus Company | Global Standard vs. LG Energy Solution | Global Standard 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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