Correlation Between LG Display and Iljin Display
Can any of the company-specific risk be diversified away by investing in both LG Display and Iljin Display 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 Iljin Display 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 Iljin Display, you can compare the effects of market volatilities on LG Display and Iljin Display 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 Iljin Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Iljin Display.
Diversification Opportunities for LG Display and Iljin Display
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 034220 and Iljin is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Iljin Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iljin Display 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 Iljin Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iljin Display has no effect on the direction of LG Display i.e., LG Display and Iljin Display go up and down completely randomly.
Pair Corralation between LG Display and Iljin Display
Assuming the 90 days trading horizon LG Display Co is expected to under-perform the Iljin Display. But the stock apears to be less risky and, when comparing its historical volatility, LG Display Co is 1.84 times less risky than Iljin Display. The stock trades about -0.03 of its potential returns per unit of risk. The Iljin Display is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 83,000 in Iljin Display on October 29, 2024 and sell it today you would earn a total of 5,500 from holding Iljin Display or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Iljin Display
Performance |
| Timeline |
| LG Display |
| Iljin Display |
LG Display and Iljin Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Iljin Display
The main advantage of trading using opposite LG Display and Iljin Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Iljin Display 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 Iljin Display will offset losses from the drop in Iljin Display's long position.| LG Display vs. KB Financial Group | LG Display vs. Shinhan Financial Group | LG Display vs. Hana Financial | LG Display vs. Woori Financial Group |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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