Correlation Between LG Display and Jeju Beer
Can any of the company-specific risk be diversified away by investing in both LG Display and Jeju Beer 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 Jeju Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display and Jeju Beer Co, you can compare the effects of market volatilities on LG Display and Jeju Beer 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 Jeju Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Jeju Beer.
Diversification Opportunities for LG Display and Jeju Beer
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 034220 and Jeju is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding LG Display and Jeju Beer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Beer 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 Jeju Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Beer has no effect on the direction of LG Display i.e., LG Display and Jeju Beer go up and down completely randomly.
Pair Corralation between LG Display and Jeju Beer
Assuming the 90 days trading horizon LG Display is expected to generate 0.44 times more return on investment than Jeju Beer. However, LG Display is 2.28 times less risky than Jeju Beer. It trades about -0.03 of its potential returns per unit of risk. Jeju Beer Co is currently generating about -0.02 per unit of risk. If you would invest 1,150,000 in LG Display on November 3, 2024 and sell it today you would lose (225,000) from holding LG Display or give up 19.57% 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. Jeju Beer Co
Performance |
| Timeline |
| LG Display |
| Jeju Beer |
LG Display and Jeju Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Jeju Beer
The main advantage of trading using opposite LG Display and Jeju Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Jeju Beer 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 Jeju Beer will offset losses from the drop in Jeju Beer's long position.| LG Display vs. Alton Sports CoLtd | LG Display vs. Solution Advanced Technology | LG Display vs. Woori Technology | LG Display vs. Dong A Steel Technology |
| Jeju Beer vs. Nh Investment And | Jeju Beer vs. Innowireless Co | Jeju Beer vs. FOODWELL Co | Jeju Beer vs. Foodnamoo |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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