Correlation Between LG Display and Neungyule Education
Can any of the company-specific risk be diversified away by investing in both LG Display and Neungyule Education 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 Neungyule Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display and Neungyule Education, you can compare the effects of market volatilities on LG Display and Neungyule Education 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 Neungyule Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Neungyule Education.
Diversification Opportunities for LG Display and Neungyule Education
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 034220 and Neungyule is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding LG Display and Neungyule Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neungyule Education 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 Neungyule Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neungyule Education has no effect on the direction of LG Display i.e., LG Display and Neungyule Education go up and down completely randomly.
Pair Corralation between LG Display and Neungyule Education
Assuming the 90 days trading horizon LG Display is expected to under-perform the Neungyule Education. But the stock apears to be less risky and, when comparing its historical volatility, LG Display is 1.57 times less risky than Neungyule Education. The stock trades about -0.26 of its potential returns per unit of risk. The Neungyule Education is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 356,500 in Neungyule Education on August 31, 2024 and sell it today you would earn a total of 11,500 from holding Neungyule Education or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display vs. Neungyule Education
Performance |
| Timeline |
| LG Display |
| Neungyule Education |
LG Display and Neungyule Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Neungyule Education
The main advantage of trading using opposite LG Display and Neungyule Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Neungyule Education 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 Neungyule Education will offset losses from the drop in Neungyule Education'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 |
| Neungyule Education vs. LG Display | Neungyule Education vs. Hyundai Motor | Neungyule Education vs. Hyundai Motor Co | Neungyule Education 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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