Correlation Between LG Energy and NBT
Can any of the company-specific risk be diversified away by investing in both LG Energy and NBT 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 NBT 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 NBT Inc, you can compare the effects of market volatilities on LG Energy and NBT 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 NBT. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and NBT.
Diversification Opportunities for LG Energy and NBT
Pay attention - limited upside
The 3 months correlation between 373220 and NBT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and NBT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBT Inc 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 NBT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBT Inc has no effect on the direction of LG Energy i.e., LG Energy and NBT go up and down completely randomly.
Pair Corralation between LG Energy and NBT
Assuming the 90 days trading horizon LG Energy Solution is expected to generate 1.24 times more return on investment than NBT. However, LG Energy is 1.24 times more volatile than NBT Inc. It trades about -0.07 of its potential returns per unit of risk. NBT Inc is currently generating about -0.11 per unit of risk. If you would invest 41,250,000 in LG Energy Solution on September 2, 2024 and sell it today you would lose (3,100,000) from holding LG Energy Solution or give up 7.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. NBT Inc
Performance |
| Timeline |
| LG Energy Solution |
| NBT Inc |
LG Energy and NBT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and NBT
The main advantage of trading using opposite LG Energy and NBT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, NBT 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 NBT will offset losses from the drop in NBT's long position.| LG Energy vs. Daishin Information Communications | LG Energy vs. Digital Power Communications | LG Energy vs. Ssangyong Information Communication | LG Energy vs. Korean Reinsurance Co |
| NBT vs. Samsung Electronics Co | NBT vs. Samsung Electronics Co | NBT vs. LG Energy Solution | NBT vs. SK Hynix |
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 Stocks Directory module to find actively traded stocks across global markets.
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