Correlation Between TRON and LG Energy
Can any of the company-specific risk be diversified away by investing in both TRON and LG Energy 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 TRON and LG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRON and LG Energy Solution, you can compare the effects of market volatilities on TRON and LG Energy 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 TRON with a short position of LG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRON and LG Energy.
Diversification Opportunities for TRON and LG Energy
Very good diversification
The 3 months correlation between TRON and 373220 is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding TRON and LG Energy Solution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Energy Solution and TRON 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 TRON are associated (or correlated) with LG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Energy Solution has no effect on the direction of TRON i.e., TRON and LG Energy go up and down completely randomly.
Pair Corralation between TRON and LG Energy
Assuming the 90 days trading horizon TRON is expected to under-perform the LG Energy. In addition to that, TRON is 1.54 times more volatile than LG Energy Solution. It trades about -0.07 of its total potential returns per unit of risk. LG Energy Solution is currently generating about 0.06 per unit of volatility. If you would invest 34,600,000 in LG Energy Solution on November 2, 2024 and sell it today you would earn a total of 750,000 from holding LG Energy Solution or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.71% |
| Values | Daily Returns |
TRON vs. LG Energy Solution
Performance |
| Timeline |
| TRON |
| LG Energy Solution |
TRON and LG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRON and LG Energy
The main advantage of trading using opposite TRON and LG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRON position performs unexpectedly, LG Energy 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 LG Energy will offset losses from the drop in LG Energy's long position.The idea behind TRON and LG Energy Solution pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| LG Energy vs. SCI Information Service | LG Energy vs. Insung Information Co | LG Energy vs. Seoul Food Industrial | LG Energy vs. DataSolution |
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.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| 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 Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |