Correlation Between LG Display and SK Telecom
Can any of the company-specific risk be diversified away by investing in both LG Display and SK Telecom 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 SK Telecom 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 SK Telecom Co, you can compare the effects of market volatilities on LG Display and SK Telecom 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 SK Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and SK Telecom.
Diversification Opportunities for LG Display and SK Telecom
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 034220 and 017670 is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and SK Telecom Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Telecom 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 SK Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Telecom has no effect on the direction of LG Display i.e., LG Display and SK Telecom go up and down completely randomly.
Pair Corralation between LG Display and SK Telecom
Assuming the 90 days trading horizon LG Display Co is expected to under-perform the SK Telecom. In addition to that, LG Display is 1.74 times more volatile than SK Telecom Co. It trades about -0.03 of its total potential returns per unit of risk. SK Telecom Co is currently generating about -0.03 per unit of volatility. If you would invest 5,560,000 in SK Telecom Co on November 6, 2024 and sell it today you would lose (20,000) from holding SK Telecom Co or give up 0.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. SK Telecom Co
Performance |
| Timeline |
| LG Display |
| SK Telecom |
LG Display and SK Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and SK Telecom
The main advantage of trading using opposite LG Display and SK Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, SK Telecom 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 SK Telecom will offset losses from the drop in SK Telecom's long position.| LG Display vs. Daejung Chemicals Metals | LG Display vs. Duksan Hi Metal | LG Display vs. Husteel | LG Display vs. INSUN Environmental New |
| SK Telecom vs. Tway Air Co | SK Telecom vs. PI Advanced Materials | SK Telecom vs. Hana Financial | SK Telecom vs. Korean Reinsurance Co |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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