Correlation Between LG Display and Lotte Non-Life
Can any of the company-specific risk be diversified away by investing in both LG Display and Lotte Non-Life 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 Lotte Non-Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display Co and Lotte Non Life Insurance, you can compare the effects of market volatilities on LG Display and Lotte Non-Life 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 Lotte Non-Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Lotte Non-Life.
Diversification Opportunities for LG Display and Lotte Non-Life
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 034220 and Lotte is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Lotte Non Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Non Life 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 Co are associated (or correlated) with Lotte Non-Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Non Life has no effect on the direction of LG Display i.e., LG Display and Lotte Non-Life go up and down completely randomly.
Pair Corralation between LG Display and Lotte Non-Life
Assuming the 90 days trading horizon LG Display Co is expected to under-perform the Lotte Non-Life. But the stock apears to be less risky and, when comparing its historical volatility, LG Display Co is 1.5 times less risky than Lotte Non-Life. The stock trades about -0.02 of its potential returns per unit of risk. The Lotte Non Life Insurance is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 200,000 in Lotte Non Life Insurance on September 14, 2024 and sell it today you would earn a total of 5,000 from holding Lotte Non Life Insurance or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Lotte Non Life Insurance
Performance |
| Timeline |
| LG Display |
| Lotte Non Life |
LG Display and Lotte Non-Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Lotte Non-Life
The main advantage of trading using opposite LG Display and Lotte Non-Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Lotte Non-Life 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 Lotte Non-Life will offset losses from the drop in Lotte Non-Life's long position.| LG Display vs. Samsung Electronics Co | LG Display vs. Samsung Electronics Co | LG Display vs. SK Hynix | LG Display vs. POSCO Holdings |
| Lotte Non-Life vs. Samsung Electronics Co | Lotte Non-Life vs. Samsung Electronics Co | Lotte Non-Life vs. SK Hynix | Lotte Non-Life vs. POSCO Holdings |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |