Correlation Between LG Display and Lindeman Asia
Can any of the company-specific risk be diversified away by investing in both LG Display and Lindeman Asia 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 Lindeman Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display and Lindeman Asia Investment, you can compare the effects of market volatilities on LG Display and Lindeman Asia 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 Lindeman Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Lindeman Asia.
Diversification Opportunities for LG Display and Lindeman Asia
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 034220 and Lindeman is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding LG Display and Lindeman Asia Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindeman Asia Investment 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 Lindeman Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindeman Asia Investment has no effect on the direction of LG Display i.e., LG Display and Lindeman Asia go up and down completely randomly.
Pair Corralation between LG Display and Lindeman Asia
Assuming the 90 days trading horizon LG Display is expected to under-perform the Lindeman Asia. But the stock apears to be less risky and, when comparing its historical volatility, LG Display is 2.01 times less risky than Lindeman Asia. The stock trades about -0.35 of its potential returns per unit of risk. The Lindeman Asia Investment is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 423,000 in Lindeman Asia Investment on October 24, 2024 and sell it today you would earn a total of 1,500 from holding Lindeman Asia Investment or generate 0.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display vs. Lindeman Asia Investment
Performance |
| Timeline |
| LG Display |
| Lindeman Asia Investment |
LG Display and Lindeman Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Lindeman Asia
The main advantage of trading using opposite LG Display and Lindeman Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Lindeman Asia 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 Lindeman Asia will offset losses from the drop in Lindeman Asia's long position.| LG Display vs. Samsung Life Insurance | LG Display vs. Sam Yang Foods | LG Display vs. Samyang Foods Co | LG Display vs. LS Materials |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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