Correlation Between LG Energy and Posco ICT
Can any of the company-specific risk be diversified away by investing in both LG Energy and Posco ICT 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 Posco ICT 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 Posco ICT, you can compare the effects of market volatilities on LG Energy and Posco ICT 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 Posco ICT. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and Posco ICT.
Diversification Opportunities for LG Energy and Posco ICT
Very weak diversification
The 3 months correlation between 373220 and Posco is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and Posco ICT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Posco ICT 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 Posco ICT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Posco ICT has no effect on the direction of LG Energy i.e., LG Energy and Posco ICT go up and down completely randomly.
Pair Corralation between LG Energy and Posco ICT
Assuming the 90 days trading horizon LG Energy Solution is expected to generate 0.89 times more return on investment than Posco ICT. However, LG Energy Solution is 1.12 times less risky than Posco ICT. It trades about 0.03 of its potential returns per unit of risk. Posco ICT is currently generating about -0.12 per unit of risk. If you would invest 39,150,000 in LG Energy Solution on September 15, 2024 and sell it today you would earn a total of 850,000 from holding LG Energy Solution or generate 2.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
LG Energy Solution vs. Posco ICT
Performance |
Timeline |
LG Energy Solution |
Posco ICT |
LG Energy and Posco ICT Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LG Energy and Posco ICT
The main advantage of trading using opposite LG Energy and Posco ICT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Energy position performs unexpectedly, Posco ICT 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 Posco ICT will offset losses from the drop in Posco ICT's long position.LG Energy vs. Doosan Heavy Ind | LG Energy vs. Hyosung Heavy Industries | LG Energy vs. Aprogen KIC | LG Energy vs. Korea Refract |
Posco ICT vs. SFA Engineering | Posco ICT vs. CJ ENM | Posco ICT vs. Paradise Co | Posco ICT vs. Seoul 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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