Correlation Between LG Energy and Dgb Financial
Can any of the company-specific risk be diversified away by investing in both LG Energy and Dgb Financial 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 Dgb Financial 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 Dgb Financial, you can compare the effects of market volatilities on LG Energy and Dgb Financial 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 Dgb Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Dgb Financial.
Diversification Opportunities for LG Energy and Dgb Financial
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 373220 and Dgb is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Dgb Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dgb Financial 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 Dgb Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dgb Financial has no effect on the direction of LG Energy i.e., LG Energy and Dgb Financial go up and down completely randomly.
Pair Corralation between LG Energy and Dgb Financial
Assuming the 90 days trading horizon LG Energy Solution is expected to under-perform the Dgb Financial. In addition to that, LG Energy is 5.5 times more volatile than Dgb Financial. It trades about -0.01 of its total potential returns per unit of risk. Dgb Financial is currently generating about 0.29 per unit of volatility. If you would invest 824,000 in Dgb Financial on August 29, 2024 and sell it today you would earn a total of 38,000 from holding Dgb Financial or generate 4.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. Dgb Financial
Performance |
| Timeline |
| LG Energy Solution |
| Dgb Financial |
LG Energy and Dgb Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Dgb Financial
The main advantage of trading using opposite LG Energy and Dgb Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Dgb Financial 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 Dgb Financial will offset losses from the drop in Dgb Financial's long position.| LG Energy vs. Lake Materials Co | LG Energy vs. LG Display Co | LG Energy vs. TOPMATERIAL LTD | LG Energy vs. Daesung Hi Tech Co |
| Dgb Financial vs. Cube Entertainment | Dgb Financial vs. Dreamus Company | Dgb Financial vs. LG Energy Solution | Dgb Financial 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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