Correlation Between LG Display and Hansol Chemical
Can any of the company-specific risk be diversified away by investing in both LG Display and Hansol Chemical 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 Hansol Chemical 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 Hansol Chemical Co, you can compare the effects of market volatilities on LG Display and Hansol Chemical 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 Hansol Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Hansol Chemical.
Diversification Opportunities for LG Display and Hansol Chemical
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 034220 and Hansol is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Hansol Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansol Chemical 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 Hansol Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansol Chemical has no effect on the direction of LG Display i.e., LG Display and Hansol Chemical go up and down completely randomly.
Pair Corralation between LG Display and Hansol Chemical
Assuming the 90 days trading horizon LG Display Co is expected to generate 0.58 times more return on investment than Hansol Chemical. However, LG Display Co is 1.73 times less risky than Hansol Chemical. It trades about -0.02 of its potential returns per unit of risk. Hansol Chemical Co is currently generating about -0.09 per unit of risk. If you would invest 964,000 in LG Display Co on September 14, 2024 and sell it today you would lose (12,000) from holding LG Display Co or give up 1.24% 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. Hansol Chemical Co
Performance |
| Timeline |
| LG Display |
| Hansol Chemical |
LG Display and Hansol Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Hansol Chemical
The main advantage of trading using opposite LG Display and Hansol Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Hansol Chemical 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 Hansol Chemical will offset losses from the drop in Hansol Chemical'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 |
| Hansol Chemical vs. Shinsegae Food | Hansol Chemical vs. Hyundai Engineering Plastics | Hansol Chemical vs. CKH Food Health | Hansol Chemical vs. PI Advanced Materials |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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