A Pair Trade Between LG Chem (Common) And LG Chem (Preferred)

• In this insight, we discuss a pair trade between LG Chem Ltd (051910 KS) (common) and LG Chem (051915 KS) (preferred).

• The price ratio (LG Chem common/preferred) is now at 2.16x, which is more than 2 STD (standard deviations). Our trading strategy involves revert to the mean.

• One of the key reasons why LG Chem (preferred)'s share price has fared much worse YTD than LG Chem (common) is due to much larger selling by the foreign investors.

Source: LG Chem