Correlation Between LG Display and HLB Power
Can any of the company-specific risk be diversified away by investing in both LG Display and HLB Power 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 HLB Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display and HLB Power Co, you can compare the effects of market volatilities on LG Display and HLB Power 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 HLB Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and HLB Power.
Diversification Opportunities for LG Display and HLB Power
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 034220 and HLB is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding LG Display and HLB Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HLB Power 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 HLB Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HLB Power has no effect on the direction of LG Display i.e., LG Display and HLB Power go up and down completely randomly.
Pair Corralation between LG Display and HLB Power
Assuming the 90 days trading horizon LG Display is expected to generate 0.43 times more return on investment than HLB Power. However, LG Display is 2.34 times less risky than HLB Power. It trades about -0.3 of its potential returns per unit of risk. HLB Power Co is currently generating about -0.49 per unit of risk. If you would invest 1,045,000 in LG Display on September 3, 2024 and sell it today you would lose (97,000) from holding LG Display or give up 9.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display vs. HLB Power Co
Performance |
| Timeline |
| LG Display |
| HLB Power |
LG Display and HLB Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and HLB Power
The main advantage of trading using opposite LG Display and HLB Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, HLB Power 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 HLB Power will offset losses from the drop in HLB Power's long position.| LG Display vs. Cuckoo Homesys Co | LG Display vs. Duksan Hi Metal | LG Display vs. Youngsin Metal Industrial | LG Display vs. PJ Metal Co |
| HLB Power vs. LG Display | HLB Power vs. Hyundai Motor | HLB Power vs. Hyundai Motor Co | HLB Power vs. Hyundai Motor Co |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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