Correlation Between LG Display and Daewoo Electronic
Can any of the company-specific risk be diversified away by investing in both LG Display and Daewoo Electronic 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 Daewoo Electronic 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 Daewoo Electronic Components, you can compare the effects of market volatilities on LG Display and Daewoo Electronic 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 Daewoo Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Daewoo Electronic.
Diversification Opportunities for LG Display and Daewoo Electronic
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 034220 and Daewoo is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Daewoo Electronic Components in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewoo Electronic 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 Daewoo Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewoo Electronic has no effect on the direction of LG Display i.e., LG Display and Daewoo Electronic go up and down completely randomly.
Pair Corralation between LG Display and Daewoo Electronic
Assuming the 90 days trading horizon LG Display Co is expected to generate 0.99 times more return on investment than Daewoo Electronic. However, LG Display Co is 1.01 times less risky than Daewoo Electronic. It trades about -0.01 of its potential returns per unit of risk. Daewoo Electronic Components is currently generating about -0.02 per unit of risk. If you would invest 1,238,696 in LG Display Co on October 13, 2024 and sell it today you would lose (302,696) from holding LG Display Co or give up 24.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Daewoo Electronic Components
Performance |
| Timeline |
| LG Display |
| Daewoo Electronic |
LG Display and Daewoo Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Daewoo Electronic
The main advantage of trading using opposite LG Display and Daewoo Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Daewoo Electronic 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 Daewoo Electronic will offset losses from the drop in Daewoo Electronic's long position.| LG Display vs. J Steel Co | LG Display vs. SeAH Besteel Corp | LG Display vs. PJ Metal Co | LG Display vs. Hironic Co |
| Daewoo Electronic vs. Daesung Hi Tech Co | Daewoo Electronic vs. LG Display Co | Daewoo Electronic vs. Lotte Data Communication | Daewoo Electronic vs. Digital Power Communications |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |