Correlation Between LG Battery and UBSFund Solutions

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

By analyzing existing cross correlation between LG Battery Value Chain and UBSFund Solutions MSCI, you can compare the effects of market volatilities on LG Battery and UBSFund Solutions 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 Battery with a short position of UBSFund Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Battery and UBSFund Solutions.

Diversification Opportunities for LG Battery and UBSFund Solutions

0.36

Correlation Coefficient

LG Battery  UBSFund Solutions

Weak diversification

The 3 months correlation between BATT and UBSFund is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding LG Battery Value Chain and UBSFund Solutions MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBSFund Solutions MSCI and LG Battery 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 Battery Value Chain are associated (or correlated) with UBSFund Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBSFund Solutions MSCI has no effect on the direction of LG Battery i.e., LG Battery and UBSFund Solutions go up and down completely randomly.

Pair Corralation between LG Battery and UBSFund Solutions

Assuming the 90 days trading horizon LG Battery Value Chain is expected to generate 0.95 times more return on investment than UBSFund Solutions. However, LG Battery Value Chain is 1.05 times less risky than UBSFund Solutions. It trades about 0.24 of its potential returns per unit of risk. UBSFund Solutions MSCI is currently generating about 0.11 per unit of risk. If you would invest  1,471  in LG Battery Value Chain on September 29, 2024 and sell it today you would earn a total of  80.00  from holding LG Battery Value Chain or generate 5.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.0%
Values	Daily Returns

LG Battery Value Chain  vs.  UBSFund Solutions MSCI

LG Battery Value

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LG Battery Value Chain are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, LG Battery is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

UBSFund Solutions MSCI

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UBSFund Solutions MSCI are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, UBSFund Solutions is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LG Battery and UBSFund Solutions

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

The idea behind LG Battery Value Chain and UBSFund Solutions MSCI 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..