Correlation Between CJ Seafood and LG Display
Can any of the company-specific risk be diversified away by investing in both CJ Seafood 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 CJ Seafood and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CJ Seafood Corp and LG Display Co, you can compare the effects of market volatilities on CJ Seafood 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 CJ Seafood with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of CJ Seafood and LG Display.
Diversification Opportunities for CJ Seafood and LG Display
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 011155 and 034220 is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding CJ Seafood Corp and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and CJ Seafood 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 CJ Seafood Corp 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 CJ Seafood i.e., CJ Seafood and LG Display go up and down completely randomly.
Pair Corralation between CJ Seafood and LG Display
Assuming the 90 days trading horizon CJ Seafood Corp is expected to generate 0.79 times more return on investment than LG Display. However, CJ Seafood Corp is 1.26 times less risky than LG Display. It trades about -0.4 of its potential returns per unit of risk. LG Display Co is currently generating about -0.33 per unit of risk. If you would invest 1,788,000 in CJ Seafood Corp on September 1, 2024 and sell it today you would lose (186,000) from holding CJ Seafood Corp or give up 10.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CJ Seafood Corp vs. LG Display Co
Performance |
| Timeline |
| CJ Seafood Corp |
| LG Display |
CJ Seafood and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CJ Seafood and LG Display
The main advantage of trading using opposite CJ Seafood and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CJ Seafood 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.| CJ Seafood vs. Busan Industrial Co | CJ Seafood vs. Busan Ind | CJ Seafood vs. Mirae Asset Daewoo | CJ Seafood vs. Finebesteel |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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