Correlation Between LG Energy and Puloon Technology
Can any of the company-specific risk be diversified away by investing in both LG Energy and Puloon 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 Puloon 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 Puloon Technology, you can compare the effects of market volatilities on LG Energy and Puloon 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 Puloon Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Puloon Technology.
Diversification Opportunities for LG Energy and Puloon Technology
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between 373220 and Puloon is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Puloon Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Puloon 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 Puloon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Puloon Technology has no effect on the direction of LG Energy i.e., LG Energy and Puloon Technology go up and down completely randomly.
Pair Corralation between LG Energy and Puloon Technology
Assuming the 90 days trading horizon LG Energy Solution is expected to generate 0.96 times more return on investment than Puloon Technology. However, LG Energy Solution is 1.04 times less risky than Puloon Technology. It trades about -0.01 of its potential returns per unit of risk. Puloon Technology is currently generating about -0.02 per unit of risk. If you would invest 43,450,000 in LG Energy Solution on September 21, 2024 and sell it today you would lose (6,250,000) from holding LG Energy Solution or give up 14.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. Puloon Technology
Performance |
| Timeline |
| LG Energy Solution |
| Puloon Technology |
LG Energy and Puloon Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Puloon Technology
The main advantage of trading using opposite LG Energy and Puloon Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Puloon 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 Puloon Technology will offset losses from the drop in Puloon Technology's long position.| LG Energy vs. Dongnam Chemical Co | LG Energy vs. Lotte Fine Chemical | LG Energy vs. Miwon Chemical | LG Energy vs. Hannong Chemicals |
| Puloon Technology vs. Cube Entertainment | Puloon Technology vs. Dreamus Company | Puloon Technology vs. LG Energy Solution | Puloon 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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