Correlation Between Daiyang Metal and LG Display
Can any of the company-specific risk be diversified away by investing in both Daiyang Metal 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 Daiyang Metal and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daiyang Metal Co and LG Display Co, you can compare the effects of market volatilities on Daiyang Metal 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 Daiyang Metal with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiyang Metal and LG Display.
Diversification Opportunities for Daiyang Metal and LG Display
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daiyang and 034220 is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Daiyang Metal Co and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Daiyang Metal 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 Daiyang Metal 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 Daiyang Metal i.e., Daiyang Metal and LG Display go up and down completely randomly.
Pair Corralation between Daiyang Metal and LG Display
Assuming the 90 days trading horizon Daiyang Metal Co is expected to under-perform the LG Display. In addition to that, Daiyang Metal is 1.99 times more volatile than LG Display Co. It trades about -0.17 of its total potential returns per unit of risk. LG Display Co is currently generating about -0.33 per unit of volatility. If you would invest 1,069,000 in LG Display Co on August 31, 2024 and sell it today you would lose (121,000) from holding LG Display Co or give up 11.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Daiyang Metal Co vs. LG Display Co
Performance |
| Timeline |
| Daiyang Metal |
| LG Display |
Daiyang Metal and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daiyang Metal and LG Display
The main advantage of trading using opposite Daiyang Metal and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daiyang Metal 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.| Daiyang Metal vs. AptaBio Therapeutics | Daiyang Metal vs. Daewoo SBI SPAC | Daiyang Metal vs. Dream Security co | Daiyang Metal vs. Microfriend |
| LG Display vs. AptaBio Therapeutics | LG Display vs. Daewoo SBI SPAC | LG Display vs. Dream Security co | LG Display vs. Microfriend |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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