Correlation Between FOODWELL and LG Display
Can any of the company-specific risk be diversified away by investing in both FOODWELL 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 FOODWELL and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FOODWELL Co and LG Display, you can compare the effects of market volatilities on FOODWELL 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 FOODWELL with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of FOODWELL and LG Display.
Diversification Opportunities for FOODWELL and LG Display
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between FOODWELL and 034220 is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding FOODWELL Co and LG Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and FOODWELL 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 FOODWELL Co 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 FOODWELL i.e., FOODWELL and LG Display go up and down completely randomly.
Pair Corralation between FOODWELL and LG Display
Assuming the 90 days trading horizon FOODWELL Co is expected to generate 0.72 times more return on investment than LG Display. However, FOODWELL Co is 1.4 times less risky than LG Display. It trades about -0.01 of its potential returns per unit of risk. LG Display is currently generating about -0.01 per unit of risk. If you would invest 566,165 in FOODWELL Co on September 12, 2024 and sell it today you would lose (74,665) from holding FOODWELL Co or give up 13.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FOODWELL Co vs. LG Display
Performance |
| Timeline |
| FOODWELL |
| LG Display |
FOODWELL and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FOODWELL and LG Display
The main advantage of trading using opposite FOODWELL and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FOODWELL 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.| FOODWELL vs. Korea New Network | FOODWELL vs. ICD Co | FOODWELL vs. DYPNF CoLtd | FOODWELL vs. Solution Advanced Technology |
| LG Display vs. Cube Entertainment | LG Display vs. Dreamus Company | LG Display vs. LG Energy Solution | LG Display vs. Dongwon System |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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