Correlation Between LG Energy and Xavis
Can any of the company-specific risk be diversified away by investing in both LG Energy and Xavis 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 Xavis 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 Xavis Co, you can compare the effects of market volatilities on LG Energy and Xavis 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 Xavis. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Xavis.
Diversification Opportunities for LG Energy and Xavis
Poor diversification
The 3 months correlation between 373220 and Xavis is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Xavis Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xavis 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 Xavis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xavis has no effect on the direction of LG Energy i.e., LG Energy and Xavis go up and down completely randomly.
Pair Corralation between LG Energy and Xavis
Assuming the 90 days trading horizon LG Energy is expected to generate 4.51 times less return on investment than Xavis. In addition to that, LG Energy is 1.1 times more volatile than Xavis Co. It trades about 0.05 of its total potential returns per unit of risk. Xavis Co is currently generating about 0.24 per unit of volatility. If you would invest 129,700 in Xavis Co on November 3, 2024 and sell it today you would earn a total of 13,300 from holding Xavis Co or generate 10.25% 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. Xavis Co
Performance |
| Timeline |
| LG Energy Solution |
| Xavis |
LG Energy and Xavis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Xavis
The main advantage of trading using opposite LG Energy and Xavis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Xavis 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 Xavis will offset losses from the drop in Xavis' 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 |
| Xavis vs. Kukdong Oil Chemicals | Xavis vs. LG Display Co | Xavis vs. Digital Power Communications | Xavis vs. Alton Sports CoLtd |
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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