Correlation Between LG Energy and NewFlex Technology
Can any of the company-specific risk be diversified away by investing in both LG Energy and NewFlex 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 NewFlex 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 NewFlex Technology Co, you can compare the effects of market volatilities on LG Energy and NewFlex 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 NewFlex Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and NewFlex Technology.
Diversification Opportunities for LG Energy and NewFlex Technology
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 373220 and NewFlex is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and NewFlex Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewFlex Technology 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 NewFlex Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewFlex Technology has no effect on the direction of LG Energy i.e., LG Energy and NewFlex Technology go up and down completely randomly.
Pair Corralation between LG Energy and NewFlex Technology
Assuming the 90 days trading horizon LG Energy Solution is expected to under-perform the NewFlex Technology. But the stock apears to be less risky and, when comparing its historical volatility, LG Energy Solution is 1.6 times less risky than NewFlex Technology. The stock trades about -0.02 of its potential returns per unit of risk. The NewFlex Technology Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 467,500 in NewFlex Technology Co on September 12, 2024 and sell it today you would lose (48,000) from holding NewFlex Technology Co or give up 10.27% 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. NewFlex Technology Co
Performance |
| Timeline |
| LG Energy Solution |
| NewFlex Technology |
LG Energy and NewFlex Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and NewFlex Technology
The main advantage of trading using opposite LG Energy and NewFlex Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, NewFlex 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 NewFlex Technology will offset losses from the drop in NewFlex Technology's long position.| LG Energy vs. Bohae Brewery | LG Energy vs. Hanjin Transportation Co | LG Energy vs. Daehan Steel | LG Energy vs. Lotte Chilsung Beverage |
| NewFlex Technology vs. Cube Entertainment | NewFlex Technology vs. Dreamus Company | NewFlex Technology vs. LG Energy Solution | NewFlex Technology 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 Stocks Directory module to find actively traded stocks across global markets.
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