Correlation Between LG Energy and LS Materials
Can any of the company-specific risk be diversified away by investing in both LG Energy and LS Materials 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 LS Materials 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 LS Materials, you can compare the effects of market volatilities on LG Energy and LS Materials 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 LS Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and LS Materials.
Diversification Opportunities for LG Energy and LS Materials
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between 373220 and 417200 is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and LS Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LS Materials 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 LS Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LS Materials has no effect on the direction of LG Energy i.e., LG Energy and LS Materials go up and down completely randomly.
Pair Corralation between LG Energy and LS Materials
Assuming the 90 days trading horizon LG Energy Solution is expected to under-perform the LS Materials. But the stock apears to be less risky and, when comparing its historical volatility, LG Energy Solution is 7.58 times less risky than LS Materials. The stock trades about -0.01 of its potential returns per unit of risk. The LS Materials is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 599,449 in LS Materials on August 29, 2024 and sell it today you would earn a total of 593,551 from holding LS Materials or generate 99.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 48.86% |
| Values | Daily Returns |
LG Energy Solution vs. LS Materials
Performance |
| Timeline |
| LG Energy Solution |
| LS Materials |
LG Energy and LS Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and LS Materials
The main advantage of trading using opposite LG Energy and LS Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, LS Materials 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 LS Materials will offset losses from the drop in LS Materials' 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 |
| LS Materials vs. Samsung Electronics Co | LS Materials vs. Samsung Electronics Co | LS Materials vs. LG Energy Solution | LS Materials 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |