Correlation Between COWELL FASHION and LG Display
Can any of the company-specific risk be diversified away by investing in both COWELL FASHION 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 COWELL FASHION and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COWELL FASHION CoLtd and LG Display, you can compare the effects of market volatilities on COWELL FASHION 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 COWELL FASHION with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of COWELL FASHION and LG Display.
Diversification Opportunities for COWELL FASHION and LG Display
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between COWELL and 034220 is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding COWELL FASHION CoLtd and LG Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and COWELL FASHION 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 COWELL FASHION CoLtd 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 COWELL FASHION i.e., COWELL FASHION and LG Display go up and down completely randomly.
Pair Corralation between COWELL FASHION and LG Display
Assuming the 90 days trading horizon COWELL FASHION CoLtd is expected to under-perform the LG Display. In addition to that, COWELL FASHION is 1.59 times more volatile than LG Display. It trades about -0.02 of its total potential returns per unit of risk. LG Display is currently generating about -0.02 per unit of volatility. If you would invest 1,329,457 in LG Display on September 2, 2024 and sell it today you would lose (381,457) from holding LG Display or give up 28.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.63% |
| Values | Daily Returns |
COWELL FASHION CoLtd vs. LG Display
Performance |
| Timeline |
| COWELL FASHION CoLtd |
| LG Display |
COWELL FASHION and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COWELL FASHION and LG Display
The main advantage of trading using opposite COWELL FASHION and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COWELL FASHION 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.| COWELL FASHION vs. AfreecaTV Co | COWELL FASHION vs. Nice Information Telecommunication | COWELL FASHION vs. Posco ICT | COWELL FASHION vs. LEENO Industrial |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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