Correlation Between LG Display and Korean Air
Can any of the company-specific risk be diversified away by investing in both LG Display and Korean Air 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 Korean Air 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 Korean Air Lines, you can compare the effects of market volatilities on LG Display and Korean Air 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 Korean Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Korean Air.
Diversification Opportunities for LG Display and Korean Air
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 034220 and Korean is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Korean Air Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Air Lines 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 Korean Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Air Lines has no effect on the direction of LG Display i.e., LG Display and Korean Air go up and down completely randomly.
Pair Corralation between LG Display and Korean Air
Assuming the 90 days trading horizon LG Display Co is expected to generate 1.03 times more return on investment than Korean Air. However, LG Display is 1.03 times more volatile than Korean Air Lines. It trades about 0.02 of its potential returns per unit of risk. Korean Air Lines is currently generating about -0.09 per unit of risk. If you would invest 935,000 in LG Display Co on October 12, 2024 and sell it today you would earn a total of 3,000 from holding LG Display Co or generate 0.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Korean Air Lines
Performance |
| Timeline |
| LG Display |
| Korean Air Lines |
LG Display and Korean Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Korean Air
The main advantage of trading using opposite LG Display and Korean Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Korean Air 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 Korean Air will offset losses from the drop in Korean Air's long position.| LG Display vs. AptaBio Therapeutics | LG Display vs. Daewoo SBI SPAC | LG Display vs. Dream Security co | LG Display vs. Microfriend |
| Korean Air vs. Dongwoo Farm To | Korean Air vs. KEPCO Engineering Construction | Korean Air vs. GS Engineering Construction | Korean Air vs. Nam Hwa Construction |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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