Correlation Between LG Display and KCC Engineering
Can any of the company-specific risk be diversified away by investing in both LG Display and KCC Engineering 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 KCC Engineering 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 KCC Engineering Construction, you can compare the effects of market volatilities on LG Display and KCC Engineering 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 KCC Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and KCC Engineering.
Diversification Opportunities for LG Display and KCC Engineering
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 034220 and KCC is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and KCC Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCC Engineering Cons 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 KCC Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCC Engineering Cons has no effect on the direction of LG Display i.e., LG Display and KCC Engineering go up and down completely randomly.
Pair Corralation between LG Display and KCC Engineering
Assuming the 90 days trading horizon LG Display Co is expected to generate 1.36 times more return on investment than KCC Engineering. However, LG Display is 1.36 times more volatile than KCC Engineering Construction. It trades about 0.0 of its potential returns per unit of risk. KCC Engineering Construction is currently generating about -0.05 per unit of risk. If you would invest 1,115,331 in LG Display Co on September 16, 2024 and sell it today you would lose (160,331) from holding LG Display Co or give up 14.38% 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. KCC Engineering Construction
Performance |
| Timeline |
| LG Display |
| KCC Engineering Cons |
LG Display and KCC Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and KCC Engineering
The main advantage of trading using opposite LG Display and KCC Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, KCC Engineering 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 KCC Engineering will offset losses from the drop in KCC Engineering'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 |
| KCC Engineering vs. A Tech Solution Co | KCC Engineering vs. Iljin Display | KCC Engineering vs. LG Display Co | KCC Engineering vs. Echomarketing CoLtd |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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