Correlation Between Shinsegae and LG Display
Can any of the company-specific risk be diversified away by investing in both Shinsegae 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 Shinsegae and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinsegae and LG Display, you can compare the effects of market volatilities on Shinsegae 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 Shinsegae with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinsegae and LG Display.
Diversification Opportunities for Shinsegae and LG Display
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shinsegae and 034220 is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Shinsegae and LG Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Shinsegae 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 Shinsegae 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 Shinsegae i.e., Shinsegae and LG Display go up and down completely randomly.
Pair Corralation between Shinsegae and LG Display
Assuming the 90 days trading horizon Shinsegae is expected to generate 0.87 times more return on investment than LG Display. However, Shinsegae is 1.15 times less risky than LG Display. It trades about 0.18 of its potential returns per unit of risk. LG Display is currently generating about -0.01 per unit of risk. If you would invest 13,270,000 in Shinsegae on December 1, 2024 and sell it today you would earn a total of 960,000 from holding Shinsegae or generate 7.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shinsegae vs. LG Display
Performance |
| Timeline |
| Shinsegae |
| LG Display |
Shinsegae and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinsegae and LG Display
The main advantage of trading using opposite Shinsegae and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinsegae 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.| Shinsegae vs. Chorokbaem Healthcare Co | Shinsegae vs. Kakao Games Corp | Shinsegae vs. Atinum Investment Co | Shinsegae vs. Daishin Information Communications |
| LG Display vs. Haesung Industrial Co | LG Display vs. Value Added Technology | LG Display vs. LEENO Industrial | LG Display vs. Digital Imaging 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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