Correlation Between LG Energy and East Asia
Can any of the company-specific risk be diversified away by investing in both LG Energy and East Asia 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 East Asia 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 East Asia Holdings, you can compare the effects of market volatilities on LG Energy and East Asia 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 East Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and East Asia.
Diversification Opportunities for LG Energy and East Asia
Very good diversification
The 3 months correlation between 373220 and East is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and East Asia Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Asia Holdings 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 East Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Asia Holdings has no effect on the direction of LG Energy i.e., LG Energy and East Asia go up and down completely randomly.
Pair Corralation between LG Energy and East Asia
Assuming the 90 days trading horizon LG Energy Solution is expected to generate 1.94 times more return on investment than East Asia. However, LG Energy is 1.94 times more volatile than East Asia Holdings. It trades about 0.0 of its potential returns per unit of risk. East Asia Holdings is currently generating about -0.19 per unit of risk. If you would invest 40,900,000 in LG Energy Solution on August 30, 2024 and sell it today you would lose (650,000) from holding LG Energy Solution or give up 1.59% 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. East Asia Holdings
Performance |
| Timeline |
| LG Energy Solution |
| East Asia Holdings |
LG Energy and East Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Energy and East Asia
The main advantage of trading using opposite LG Energy and East Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, East Asia 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 East Asia will offset losses from the drop in East Asia's long position.| LG Energy vs. Daou Technology | LG Energy vs. RFTech Co | LG Energy vs. Hana Technology Co | LG Energy vs. Global Standard Technology |
| East Asia vs. IC Technology Co | East Asia vs. Clean Science co | East Asia vs. Nh Investment And | East Asia vs. DB Financial Investment |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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