Correlation Between LG Energy and Solux
Can any of the company-specific risk be diversified away by investing in both LG Energy and Solux 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 Solux 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 Solux Co, you can compare the effects of market volatilities on LG Energy and Solux 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 Solux. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Solux.
Diversification Opportunities for LG Energy and Solux
Significant diversification
The 3 months correlation between 373220 and Solux is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Solux Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solux 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 Solux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solux has no effect on the direction of LG Energy i.e., LG Energy and Solux go up and down completely randomly.
Pair Corralation between LG Energy and Solux
Assuming the 90 days trading horizon LG Energy Solution is expected to under-perform the Solux. In addition to that, LG Energy is 1.29 times more volatile than Solux Co. It trades about -0.01 of its total potential returns per unit of risk. Solux Co is currently generating about 0.0 per unit of volatility. If you would invest 874,000 in Solux Co on August 29, 2024 and sell it today you would lose (11,000) from holding Solux Co or give up 1.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. Solux Co
Performance |
| Timeline |
| LG Energy Solution |
| Solux |
LG Energy and Solux Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and Solux
The main advantage of trading using opposite LG Energy and Solux positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Solux 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 Solux will offset losses from the drop in Solux's long position.| LG Energy vs. Lake Materials Co | LG Energy vs. LG Display Co | LG Energy vs. TOPMATERIAL LTD | LG Energy vs. Daesung Hi Tech Co |
| Solux vs. Eugene Technology CoLtd | Solux vs. Ilji Technology Co | Solux vs. Global Standard Technology | Solux vs. Seoam Machinery Industry |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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