Correlation Between LG Energy and RPBio
Can any of the company-specific risk be diversified away by investing in both LG Energy and RPBio 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 RPBio 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 RPBio Inc, you can compare the effects of market volatilities on LG Energy and RPBio 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 RPBio. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and RPBio.
Diversification Opportunities for LG Energy and RPBio
Very good diversification
The 3 months correlation between 373220 and RPBio is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and RPBio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPBio 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 RPBio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPBio Inc has no effect on the direction of LG Energy i.e., LG Energy and RPBio go up and down completely randomly.
Pair Corralation between LG Energy and RPBio
Assuming the 90 days trading horizon LG Energy Solution is expected to generate 1.12 times more return on investment than RPBio. However, LG Energy is 1.12 times more volatile than RPBio Inc. It trades about -0.03 of its potential returns per unit of risk. RPBio Inc is currently generating about -0.07 per unit of risk. If you would invest 59,100,000 in LG Energy Solution on August 31, 2024 and sell it today you would lose (20,950,000) from holding LG Energy Solution or give up 35.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Energy Solution vs. RPBio Inc
Performance |
| Timeline |
| LG Energy Solution |
| RPBio Inc |
LG Energy and RPBio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and RPBio
The main advantage of trading using opposite LG Energy and RPBio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, RPBio 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 RPBio will offset losses from the drop in RPBio's long position.| LG Energy vs. Ilji Technology Co | LG Energy vs. AurosTechnology | LG Energy vs. Osang Healthcare Co,Ltd | LG Energy vs. Hana Technology Co |
| RPBio vs. Jeju Semiconductor Corp | RPBio vs. TS Investment Corp | RPBio vs. ABOV Semiconductor Co | RPBio vs. Hanmi Semiconductor 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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