Correlation Between LG Display and RFTech
Can any of the company-specific risk be diversified away by investing in both LG Display and RFTech 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 RFTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display and RFTech Co, you can compare the effects of market volatilities on LG Display and RFTech 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 RFTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and RFTech.
Diversification Opportunities for LG Display and RFTech
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 034220 and RFTech is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding LG Display and RFTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RFTech 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 RFTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RFTech has no effect on the direction of LG Display i.e., LG Display and RFTech go up and down completely randomly.
Pair Corralation between LG Display and RFTech
Assuming the 90 days trading horizon LG Display is expected to under-perform the RFTech. But the stock apears to be less risky and, when comparing its historical volatility, LG Display is 1.67 times less risky than RFTech. The stock trades about -0.18 of its potential returns per unit of risk. The RFTech Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 320,500 in RFTech Co on September 12, 2024 and sell it today you would earn a total of 58,000 from holding RFTech Co or generate 18.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display vs. RFTech Co
Performance |
| Timeline |
| LG Display |
| RFTech |
LG Display and RFTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and RFTech
The main advantage of trading using opposite LG Display and RFTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, RFTech 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 RFTech will offset losses from the drop in RFTech's long position.| LG Display vs. Cube Entertainment | LG Display vs. Dreamus Company | LG Display vs. LG Energy Solution | LG Display vs. Dongwon System |
| RFTech vs. Korea New Network | RFTech vs. Solution Advanced Technology | RFTech vs. Busan Industrial Co | RFTech vs. Busan Ind |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |