Correlation Between LG Display and Naver
Can any of the company-specific risk be diversified away by investing in both LG Display and Naver 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 Naver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display and Naver, you can compare the effects of market volatilities on LG Display and Naver 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 Naver. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Naver.
Diversification Opportunities for LG Display and Naver
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between 034220 and Naver is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding LG Display and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver 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 Naver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naver has no effect on the direction of LG Display i.e., LG Display and Naver go up and down completely randomly.
Pair Corralation between LG Display and Naver
Assuming the 90 days trading horizon LG Display is expected to generate 8.8 times less return on investment than Naver. In addition to that, LG Display is 1.01 times more volatile than Naver. It trades about 0.01 of its total potential returns per unit of risk. Naver is currently generating about 0.11 per unit of volatility. If you would invest 20,300,000 in Naver on November 27, 2024 and sell it today you would earn a total of 2,500,000 from holding Naver or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display vs. Naver
Performance |
| Timeline |
| LG Display |
| Naver |
LG Display and Naver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Naver
The main advantage of trading using opposite LG Display and Naver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Naver 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 Naver will offset losses from the drop in Naver's long position.| LG Display vs. Coloray International Investment | LG Display vs. SV Investment | LG Display vs. E Investment Development | LG Display vs. Stic Investments |
| Naver vs. LG Chemicals | Naver vs. iNtRON Biotechnology | Naver vs. Yura Tech Co | Naver vs. Dongbang Transport Logistics |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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