Correlation Between LG Energy and Eugene Technology
Can any of the company-specific risk be diversified away by investing in both LG Energy and Eugene Technology 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 Eugene Technology 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 Eugene Technology CoLtd, you can compare the effects of market volatilities on LG Energy and Eugene Technology 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 Eugene Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Eugene Technology.
Diversification Opportunities for LG Energy and Eugene Technology
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 373220 and Eugene is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Eugene Technology CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eugene Technology 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 Eugene Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eugene Technology CoLtd has no effect on the direction of LG Energy i.e., LG Energy and Eugene Technology go up and down completely randomly.
Pair Corralation between LG Energy and Eugene Technology
Assuming the 90 days trading horizon LG Energy Solution is expected to generate 1.13 times more return on investment than Eugene Technology. However, LG Energy is 1.13 times more volatile than Eugene Technology CoLtd. It trades about 0.0 of its potential returns per unit of risk. Eugene Technology CoLtd is currently generating about -0.04 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. Eugene Technology CoLtd
Performance |
| Timeline |
| LG Energy Solution |
| Eugene Technology CoLtd |
LG Energy and Eugene Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Eugene Technology
The main advantage of trading using opposite LG Energy and Eugene Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Eugene Technology 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 Eugene Technology will offset losses from the drop in Eugene Technology'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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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