Correlation Between LG Chem and BitNine

Can any of the company-specific risk be diversified away by investing in both LG Chem and BitNine 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 Chem and BitNine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LG Chem and BitNine Co, you can compare the effects of market volatilities on LG Chem and BitNine 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 Chem with a short position of BitNine. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Chem and BitNine.

Diversification Opportunities for LG Chem and BitNine

0.87

Correlation Coefficient

LG Chem  BitNine

Very poor diversification

The 3 months correlation between 051915 and BitNine is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding LG Chem and BitNine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BitNine and LG Chem 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 Chem are associated (or correlated) with BitNine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BitNine has no effect on the direction of LG Chem i.e., LG Chem and BitNine go up and down completely randomly.

Pair Corralation between LG Chem and BitNine

Assuming the 90 days trading horizon LG Chem is expected to under-perform the BitNine. But the stock apears to be less risky and, when comparing its historical volatility, LG Chem is 1.73 times less risky than BitNine. The stock trades about -0.28 of its potential returns per unit of risk. The BitNine Co is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  242,500  in BitNine Co on December 11, 2024 and sell it today you would lose (37,000) from holding BitNine Co or give up 15.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

LG Chem  vs.  BitNine Co

LG Chem

Risk-Adjusted Performance

Very Weak

Over the last 90 days LG Chem has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

BitNine

Risk-Adjusted Performance

Very Weak

Over the last 90 days BitNine Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with LG Chem and BitNine

The main advantage of trading using opposite LG Chem and BitNine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Chem position performs unexpectedly, BitNine 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 BitNine will offset losses from the drop in BitNine's long position.

The idea behind LG Chem and BitNine Co 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.