Correlation Between LG Display and FarmStory
Can any of the company-specific risk be diversified away by investing in both LG Display and FarmStory 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 LG Display and FarmStory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display and FarmStory Co, you can compare the effects of market volatilities on LG Display and FarmStory 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 LG Display with a short position of FarmStory. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and FarmStory.
Diversification Opportunities for LG Display and FarmStory
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 034220 and FarmStory is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding LG Display and FarmStory Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FarmStory and LG Display 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 LG Display are associated (or correlated) with FarmStory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FarmStory has no effect on the direction of LG Display i.e., LG Display and FarmStory go up and down completely randomly.
Pair Corralation between LG Display and FarmStory
Assuming the 90 days trading horizon LG Display is expected to generate 1.02 times more return on investment than FarmStory. However, LG Display is 1.02 times more volatile than FarmStory Co. It trades about -0.03 of its potential returns per unit of risk. FarmStory Co is currently generating about -0.04 per unit of risk. If you would invest 1,463,000 in LG Display on August 26, 2024 and sell it today you would lose (479,000) from holding LG Display or give up 32.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display vs. FarmStory Co
Performance |
| Timeline |
| LG Display |
| FarmStory |
LG Display and FarmStory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and FarmStory
The main advantage of trading using opposite LG Display and FarmStory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, FarmStory 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 FarmStory will offset losses from the drop in FarmStory's long position.| LG Display vs. Korea Real Estate | LG Display vs. Korea Ratings Co | LG Display vs. IQuest Co | LG Display vs. Wonbang Tech Co |
| FarmStory vs. AptaBio Therapeutics | FarmStory vs. Daewoo SBI SPAC | FarmStory vs. Dream Security co | FarmStory 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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