Correlation Between LG Energy and JLK
Can any of the company-specific risk be diversified away by investing in both LG Energy and JLK 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 JLK 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 JLK Inc, you can compare the effects of market volatilities on LG Energy and JLK 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 JLK. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and JLK.
Diversification Opportunities for LG Energy and JLK
Modest diversification
The 3 months correlation between 373220 and JLK is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and JLK Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JLK 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 JLK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JLK Inc has no effect on the direction of LG Energy i.e., LG Energy and JLK go up and down completely randomly.
Pair Corralation between LG Energy and JLK
Assuming the 90 days trading horizon LG Energy Solution is expected to under-perform the JLK. But the stock apears to be less risky and, when comparing its historical volatility, LG Energy Solution is 1.49 times less risky than JLK. The stock trades about -0.05 of its potential returns per unit of risk. The JLK Inc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 657,000 in JLK Inc on September 15, 2024 and sell it today you would earn a total of 159,000 from holding JLK Inc or generate 24.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
LG Energy Solution vs. JLK Inc
Performance |
| Timeline |
| LG Energy Solution |
| JLK Inc |
LG Energy and JLK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and JLK
The main advantage of trading using opposite LG Energy and JLK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, JLK 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 JLK will offset losses from the drop in JLK's long position.| LG Energy vs. Dongbang Transport Logistics | LG Energy vs. Choil Aluminum | LG Energy vs. Neungyule Education | LG Energy vs. Inzi Display CoLtd |
| JLK vs. Samsung Electronics Co | JLK vs. Samsung Electronics Co | JLK vs. LG Energy Solution | JLK 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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