Correlation Between LG Display and Jeong Moon
Can any of the company-specific risk be diversified away by investing in both LG Display and Jeong Moon 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 Jeong Moon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display and Jeong Moon Information, you can compare the effects of market volatilities on LG Display and Jeong Moon 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 Jeong Moon. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Jeong Moon.
Diversification Opportunities for LG Display and Jeong Moon
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 034220 and Jeong is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding LG Display and Jeong Moon Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeong Moon Information 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 Jeong Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeong Moon Information has no effect on the direction of LG Display i.e., LG Display and Jeong Moon go up and down completely randomly.
Pair Corralation between LG Display and Jeong Moon
Assuming the 90 days trading horizon LG Display is expected to generate 0.8 times more return on investment than Jeong Moon. However, LG Display is 1.25 times less risky than Jeong Moon. It trades about 0.09 of its potential returns per unit of risk. Jeong Moon Information is currently generating about 0.03 per unit of risk. If you would invest 906,000 in LG Display on November 3, 2024 and sell it today you would earn a total of 19,000 from holding LG Display or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display vs. Jeong Moon Information
Performance |
| Timeline |
| LG Display |
| Jeong Moon Information |
LG Display and Jeong Moon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Jeong Moon
The main advantage of trading using opposite LG Display and Jeong Moon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Jeong Moon 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 Jeong Moon will offset losses from the drop in Jeong Moon's long position.| LG Display vs. Ssangyong Information Communication | LG Display vs. Digital Power Communications | LG Display vs. Taegu Broadcasting | LG Display vs. Daishin Information Communications |
| Jeong Moon vs. Woori Technology Investment | Jeong Moon vs. Yura Tech Co | Jeong Moon vs. Orbitech Co | Jeong Moon vs. Coloray International Investment |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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