Correlation Between LG Energy and CTK
Can any of the company-specific risk be diversified away by investing in both LG Energy and CTK 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 CTK 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 CTK Co, you can compare the effects of market volatilities on LG Energy and CTK 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 CTK. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and CTK.
Diversification Opportunities for LG Energy and CTK
Very good diversification
The 3 months correlation between 373220 and CTK is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and CTK Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTK 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 CTK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTK Co has no effect on the direction of LG Energy i.e., LG Energy and CTK go up and down completely randomly.
Pair Corralation between LG Energy and CTK
Assuming the 90 days trading horizon LG Energy Solution is expected to generate 0.81 times more return on investment than CTK. However, LG Energy Solution is 1.23 times less risky than CTK. It trades about 0.05 of its potential returns per unit of risk. CTK Co is currently generating about -0.01 per unit of risk. If you would invest 33,200,000 in LG Energy Solution on September 1, 2024 and sell it today you would earn a total of 4,950,000 from holding LG Energy Solution or generate 14.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.19% |
Values | Daily Returns |
LG Energy Solution vs. CTK Co
Performance |
Timeline |
LG Energy Solution |
CTK Co |
LG Energy and CTK Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LG Energy and CTK
The main advantage of trading using opposite LG Energy and CTK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, CTK 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 CTK will offset losses from the drop in CTK'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 |
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 CEOs Directory module to screen CEOs from public companies around the world.
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