Correlation Between LG Energy and Hanjoo Light
Can any of the company-specific risk be diversified away by investing in both LG Energy and Hanjoo Light 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 Hanjoo Light 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 Hanjoo Light Metal, you can compare the effects of market volatilities on LG Energy and Hanjoo Light 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 Hanjoo Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Hanjoo Light.
Diversification Opportunities for LG Energy and Hanjoo Light
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 373220 and Hanjoo is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Hanjoo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjoo Light Metal 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 Hanjoo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanjoo Light Metal has no effect on the direction of LG Energy i.e., LG Energy and Hanjoo Light go up and down completely randomly.
Pair Corralation between LG Energy and Hanjoo Light
Assuming the 90 days trading horizon LG Energy Solution is expected to under-perform the Hanjoo Light. In addition to that, LG Energy is 2.04 times more volatile than Hanjoo Light Metal. It trades about -0.01 of its total potential returns per unit of risk. Hanjoo Light Metal is currently generating about 0.2 per unit of volatility. If you would invest 78,800 in Hanjoo Light Metal on November 4, 2024 and sell it today you would earn a total of 3,300 from holding Hanjoo Light Metal or generate 4.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. Hanjoo Light Metal
Performance |
| Timeline |
| LG Energy Solution |
| Hanjoo Light Metal |
LG Energy and Hanjoo Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Hanjoo Light
The main advantage of trading using opposite LG Energy and Hanjoo Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Hanjoo Light 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 Hanjoo Light will offset losses from the drop in Hanjoo Light's long position.| LG Energy vs. Korea Information Engineering | LG Energy vs. Alton Sports CoLtd | LG Energy vs. Lotte Data Communication | LG Energy vs. Barunson Entertainment Arts |
| Hanjoo Light vs. Samyoung Electronics Co | Hanjoo Light vs. SungMoon Electronics Co | Hanjoo Light vs. Vissem Electronics Co | Hanjoo Light vs. Sungmoon Electronics Co |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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