Correlation Between LG Energy and Jb Financial
Can any of the company-specific risk be diversified away by investing in both LG Energy and Jb 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 Jb 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 Jb Financial, you can compare the effects of market volatilities on LG Energy and Jb 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 Jb Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Jb Financial.
Diversification Opportunities for LG Energy and Jb Financial
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between 373220 and 175330 is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Jb Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jb 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 Jb Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jb Financial has no effect on the direction of LG Energy i.e., LG Energy and Jb Financial go up and down completely randomly.
Pair Corralation between LG Energy and Jb Financial
Assuming the 90 days trading horizon LG Energy is expected to generate 1.86 times less return on investment than Jb Financial. In addition to that, LG Energy is 1.37 times more volatile than Jb Financial. It trades about 0.05 of its total potential returns per unit of risk. Jb Financial is currently generating about 0.14 per unit of volatility. If you would invest 1,412,909 in Jb Financial on September 1, 2024 and sell it today you would earn a total of 555,091 from holding Jb Financial or generate 39.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. Jb Financial
Performance |
| Timeline |
| LG Energy Solution |
| Jb Financial |
LG Energy and Jb Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Jb Financial
The main advantage of trading using opposite LG Energy and Jb Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Jb 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 Jb Financial will offset losses from the drop in Jb Financial's long position.| LG Energy vs. Doosan Heavy Ind | LG Energy vs. Hyosung Heavy Industries | LG Energy vs. Aprogen KIC | LG Energy vs. SNTEnergy Co |
| Jb Financial vs. Samsung Electronics Co | Jb Financial vs. Samsung Electronics Co | Jb Financial vs. KB Financial Group | Jb Financial vs. Shinhan Financial Group |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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