Correlation Between TJ Media and LG Display
Can any of the company-specific risk be diversified away by investing in both TJ Media 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 TJ Media and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TJ media Co and LG Display, you can compare the effects of market volatilities on TJ Media 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 TJ Media with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of TJ Media and LG Display.
Diversification Opportunities for TJ Media and LG Display
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 032540 and 034220 is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding TJ media Co and LG Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and TJ Media 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 TJ media 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 TJ Media i.e., TJ Media and LG Display go up and down completely randomly.
Pair Corralation between TJ Media and LG Display
Assuming the 90 days trading horizon TJ media Co is expected to generate 0.65 times more return on investment than LG Display. However, TJ media Co is 1.55 times less risky than LG Display. It trades about -0.35 of its potential returns per unit of risk. LG Display is currently generating about -0.26 per unit of risk. If you would invest 507,000 in TJ media Co on September 2, 2024 and sell it today you would lose (36,500) from holding TJ media Co or give up 7.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TJ media Co vs. LG Display
Performance |
| Timeline |
| TJ media |
| LG Display |
TJ Media and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TJ Media and LG Display
The main advantage of trading using opposite TJ Media and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TJ Media 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.| TJ Media vs. LG Display | TJ Media vs. Hyundai Motor Co | TJ Media vs. Hyundai Motor Co | TJ Media vs. Adaptive Plasma Technology |
| LG Display vs. Dongsin Engineering Construction | LG Display vs. Doosan Fuel Cell | LG Display vs. Daishin Balance 1 | LG Display vs. Total Soft Bank |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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