Correlation Between LG Energy and SEOWONINTECHCoLtd
Can any of the company-specific risk be diversified away by investing in both LG Energy and SEOWONINTECHCoLtd 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 SEOWONINTECHCoLtd 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 SEOWONINTECHCoLtd, you can compare the effects of market volatilities on LG Energy and SEOWONINTECHCoLtd 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 SEOWONINTECHCoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and SEOWONINTECHCoLtd.
Diversification Opportunities for LG Energy and SEOWONINTECHCoLtd
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between 373220 and SEOWONINTECHCoLtd is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and SEOWONINTECHCoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEOWONINTECHCoLtd 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 SEOWONINTECHCoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEOWONINTECHCoLtd has no effect on the direction of LG Energy i.e., LG Energy and SEOWONINTECHCoLtd go up and down completely randomly.
Pair Corralation between LG Energy and SEOWONINTECHCoLtd
Assuming the 90 days trading horizon LG Energy Solution is expected to under-perform the SEOWONINTECHCoLtd. In addition to that, LG Energy is 1.87 times more volatile than SEOWONINTECHCoLtd. It trades about -0.14 of its total potential returns per unit of risk. SEOWONINTECHCoLtd is currently generating about 0.09 per unit of volatility. If you would invest 528,349 in SEOWONINTECHCoLtd on October 20, 2024 and sell it today you would earn a total of 9,651 from holding SEOWONINTECHCoLtd or generate 1.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
LG Energy Solution vs. SEOWONINTECHCoLtd
Performance |
| Timeline |
| LG Energy Solution |
| SEOWONINTECHCoLtd |
LG Energy and SEOWONINTECHCoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and SEOWONINTECHCoLtd
The main advantage of trading using opposite LG Energy and SEOWONINTECHCoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, SEOWONINTECHCoLtd 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 SEOWONINTECHCoLtd will offset losses from the drop in SEOWONINTECHCoLtd's long position.| LG Energy vs. SEOWONINTECHCoLtd | LG Energy vs. KMH Hitech Co | LG Energy vs. Spolytech Co | LG Energy vs. Mobile Appliance |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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