Correlation Between LG Energy and Humasis Co
Can any of the company-specific risk be diversified away by investing in both LG Energy and Humasis Co 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 Humasis Co 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 Humasis Co, you can compare the effects of market volatilities on LG Energy and Humasis Co 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 Humasis Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Humasis Co.
Diversification Opportunities for LG Energy and Humasis Co
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 373220 and Humasis is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Humasis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humasis Co 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 Humasis Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humasis Co has no effect on the direction of LG Energy i.e., LG Energy and Humasis Co go up and down completely randomly.
Pair Corralation between LG Energy and Humasis Co
Assuming the 90 days trading horizon LG Energy Solution is expected to generate 1.46 times more return on investment than Humasis Co. However, LG Energy is 1.46 times more volatile than Humasis Co. It trades about 0.22 of its potential returns per unit of risk. Humasis Co is currently generating about 0.04 per unit of risk. If you would invest 35,200,000 in LG Energy Solution on November 27, 2024 and sell it today you would earn a total of 3,350,000 from holding LG Energy Solution or generate 9.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. Humasis Co
Performance |
| Timeline |
| LG Energy Solution |
| Humasis Co |
LG Energy and Humasis Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Humasis Co
The main advantage of trading using opposite LG Energy and Humasis Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Humasis Co 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 Humasis Co will offset losses from the drop in Humasis Co's long position.| LG Energy vs. Worldex Industry Trading | LG Energy vs. Aju IB Investment | LG Energy vs. Hana Financial | LG Energy vs. Jeju Bank |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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