Correlation Between Golden Bridge and LG Display
Can any of the company-specific risk be diversified away by investing in both Golden Bridge and LG Display 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 Golden Bridge and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Bridge Investment and LG Display Co, you can compare the effects of market volatilities on Golden Bridge and LG Display 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 Golden Bridge with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Bridge and LG Display.
Diversification Opportunities for Golden Bridge and LG Display
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Golden and 034220 is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Golden Bridge Investment and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Golden Bridge 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 Golden Bridge Investment are associated (or correlated) with LG Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Display has no effect on the direction of Golden Bridge i.e., Golden Bridge and LG Display go up and down completely randomly.
Pair Corralation between Golden Bridge and LG Display
Assuming the 90 days trading horizon Golden Bridge Investment is expected to generate 0.5 times more return on investment than LG Display. However, Golden Bridge Investment is 2.01 times less risky than LG Display. It trades about 0.22 of its potential returns per unit of risk. LG Display Co is currently generating about 0.06 per unit of risk. If you would invest 41,300 in Golden Bridge Investment on October 11, 2024 and sell it today you would earn a total of 1,800 from holding Golden Bridge Investment or generate 4.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Bridge Investment vs. LG Display Co
Performance |
| Timeline |
| Golden Bridge Investment |
| LG Display |
Golden Bridge and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Bridge and LG Display
The main advantage of trading using opposite Golden Bridge and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Bridge position performs unexpectedly, LG Display 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 LG Display will offset losses from the drop in LG Display's long position.| Golden Bridge vs. CG Hi Tech | Golden Bridge vs. Nice Information Telecommunication | Golden Bridge vs. BGF Retail Co | Golden Bridge vs. Wireless Power Amplifier |
| LG Display vs. Golden Bridge Investment | LG Display vs. Seers Technology | LG Display vs. Coloray International Investment | LG Display vs. Global Standard Technology |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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