Correlation Between Dongnam Chemical and LG Display
Can any of the company-specific risk be diversified away by investing in both Dongnam Chemical 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 Dongnam Chemical and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongnam Chemical Co and LG Display Co, you can compare the effects of market volatilities on Dongnam Chemical 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 Dongnam Chemical with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongnam Chemical and LG Display.
Diversification Opportunities for Dongnam Chemical and LG Display
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongnam and 034220 is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dongnam Chemical 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 Dongnam Chemical 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 Dongnam Chemical 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 Dongnam Chemical i.e., Dongnam Chemical and LG Display go up and down completely randomly.
Pair Corralation between Dongnam Chemical and LG Display
Assuming the 90 days trading horizon Dongnam Chemical Co is expected to generate 0.55 times more return on investment than LG Display. However, Dongnam Chemical Co is 1.82 times less risky than LG Display. It trades about -0.01 of its potential returns per unit of risk. LG Display Co is currently generating about -0.03 per unit of risk. If you would invest 3,388,254 in Dongnam Chemical Co on September 14, 2024 and sell it today you would lose (233,254) from holding Dongnam Chemical Co or give up 6.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.62% |
| Values | Daily Returns |
Dongnam Chemical Co vs. LG Display Co
Performance |
| Timeline |
| Dongnam Chemical |
| LG Display |
Dongnam Chemical and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongnam Chemical and LG Display
The main advantage of trading using opposite Dongnam Chemical and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongnam Chemical 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.| Dongnam Chemical vs. FNSTech Co | Dongnam Chemical vs. Inzi Display CoLtd | Dongnam Chemical vs. Shinsegae Information Communication | Dongnam Chemical vs. Dong A Steel Technology |
| LG Display vs. Samsung Electronics Co | LG Display vs. Samsung Electronics Co | LG Display vs. SK Hynix | LG Display vs. POSCO Holdings |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |