Correlation Between LG Display and Showbox Corp
Can any of the company-specific risk be diversified away by investing in both LG Display and Showbox Corp 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 Showbox Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display and Showbox Corp, you can compare the effects of market volatilities on LG Display and Showbox Corp 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 Showbox Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Showbox Corp.
Diversification Opportunities for LG Display and Showbox Corp
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 034220 and Showbox is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding LG Display and Showbox Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Showbox Corp 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 Showbox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Showbox Corp has no effect on the direction of LG Display i.e., LG Display and Showbox Corp go up and down completely randomly.
Pair Corralation between LG Display and Showbox Corp
Assuming the 90 days trading horizon LG Display is expected to under-perform the Showbox Corp. But the stock apears to be less risky and, when comparing its historical volatility, LG Display is 1.19 times less risky than Showbox Corp. The stock trades about -0.03 of its potential returns per unit of risk. The Showbox Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 362,000 in Showbox Corp on November 27, 2024 and sell it today you would lose (30,000) from holding Showbox Corp or give up 8.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
LG Display vs. Showbox Corp
Performance |
| Timeline |
| LG Display |
| Showbox Corp |
LG Display and Showbox Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Showbox Corp
The main advantage of trading using opposite LG Display and Showbox Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Showbox Corp 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 Showbox Corp will offset losses from the drop in Showbox Corp'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 |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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