Correlation Between LG Display and TJ Media
Can any of the company-specific risk be diversified away by investing in both LG Display and TJ Media 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 TJ Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display and TJ media Co, you can compare the effects of market volatilities on LG Display and TJ Media 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 TJ Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and TJ Media.
Diversification Opportunities for LG Display and TJ Media
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 034220 and 032540 is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding LG Display and TJ media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJ media 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 TJ Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJ media has no effect on the direction of LG Display i.e., LG Display and TJ Media go up and down completely randomly.
Pair Corralation between LG Display and TJ Media
Assuming the 90 days trading horizon LG Display is expected to generate 2.4 times more return on investment than TJ Media. However, LG Display is 2.4 times more volatile than TJ media Co. It trades about -0.01 of its potential returns per unit of risk. TJ media Co is currently generating about -0.15 per unit of risk. If you would invest 1,012,000 in LG Display on September 2, 2024 and sell it today you would lose (64,000) from holding LG Display or give up 6.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display vs. TJ media Co
Performance |
| Timeline |
| LG Display |
| TJ media |
LG Display and TJ Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and TJ Media
The main advantage of trading using opposite LG Display and TJ Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, TJ Media 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 TJ Media will offset losses from the drop in TJ Media's long position.| LG Display vs. Dongsin Engineering Construction | LG Display vs. Doosan Fuel Cell | LG Display vs. Daishin Balance 1 | LG Display vs. Total Soft Bank |
| TJ Media vs. LG Display | TJ Media vs. Hyundai Motor Co | TJ Media vs. Hyundai Motor Co | TJ Media vs. Adaptive Plasma Technology |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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