Correlation Between Lotte Chilsung and LG Display
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung 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 Lotte Chilsung and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Chilsung Beverage and LG Display, you can compare the effects of market volatilities on Lotte Chilsung 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 Lotte Chilsung with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and LG Display.
Diversification Opportunities for Lotte Chilsung and LG Display
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lotte and 034220 is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and LG Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Lotte Chilsung 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 Lotte Chilsung Beverage 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 Lotte Chilsung i.e., Lotte Chilsung and LG Display go up and down completely randomly.
Pair Corralation between Lotte Chilsung and LG Display
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to generate 1.17 times more return on investment than LG Display. However, Lotte Chilsung is 1.17 times more volatile than LG Display. It trades about 0.02 of its potential returns per unit of risk. LG Display is currently generating about -0.27 per unit of risk. If you would invest 11,900,000 in Lotte Chilsung Beverage on September 4, 2024 and sell it today you would earn a total of 60,000 from holding Lotte Chilsung Beverage or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. LG Display
Performance |
| Timeline |
| Lotte Chilsung Beverage |
| LG Display |
Lotte Chilsung and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and LG Display
The main advantage of trading using opposite Lotte Chilsung and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung 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.| Lotte Chilsung vs. LG Display | Lotte Chilsung vs. Hyundai Motor | Lotte Chilsung vs. Hyundai Motor Co | Lotte Chilsung vs. Hyundai Motor Co |
| LG Display vs. Sam Yang Foods | LG Display vs. Polaris Office Corp | LG Display vs. Sewoon Medical Co | LG Display vs. Okins Electronics Co |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |