Correlation Between LG Energy and I Components

Can any of the company-specific risk be diversified away by investing in both LG Energy and I Components 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 I Components 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 i Components Co, you can compare the effects of market volatilities on LG Energy and I Components 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 I Components. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Energy and I Components.

Diversification Opportunities for LG Energy and I Components

0.0

Correlation Coefficient

LG Energy  I Components

Pay attention - limited upside

The 3 months correlation between 373220 and 059100 is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding LG Energy Solution and i Components Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on i Components 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 I Components. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of i Components has no effect on the direction of LG Energy i.e., LG Energy and I Components go up and down completely randomly.

Pair Corralation between LG Energy and I Components

If you would invest (100.00) in i Components Co on October 21, 2024 and sell it today you would earn a total of  100.00  from holding i Components Co or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

LG Energy Solution  vs.  i Components Co

LG Energy Solution

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LG Energy Solution has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

i Components

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days i Components Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, I Components is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LG Energy and I Components

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

The idea behind LG Energy Solution and i Components 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.