Correlation Between LG Display and LG Uplus
Can any of the company-specific risk be diversified away by investing in both LG Display and LG Uplus 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 LG Uplus 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 LG Uplus, you can compare the effects of market volatilities on LG Display and LG Uplus 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 LG Uplus. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and LG Uplus.
Diversification Opportunities for LG Display and LG Uplus
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 034220 and 032640 is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and LG Uplus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Uplus 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 LG Uplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Uplus has no effect on the direction of LG Display i.e., LG Display and LG Uplus go up and down completely randomly.
Pair Corralation between LG Display and LG Uplus
Assuming the 90 days trading horizon LG Display Co is expected to generate 0.95 times more return on investment than LG Uplus. However, LG Display Co is 1.05 times less risky than LG Uplus. It trades about -0.13 of its potential returns per unit of risk. LG Uplus is currently generating about -0.44 per unit of risk. If you would invest 944,000 in LG Display Co on October 25, 2024 and sell it today you would lose (28,000) from holding LG Display Co or give up 2.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. LG Uplus
Performance |
| Timeline |
| LG Display |
| LG Uplus |
LG Display and LG Uplus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and LG Uplus
The main advantage of trading using opposite LG Display and LG Uplus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, LG Uplus 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 LG Uplus will offset losses from the drop in LG Uplus' 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 |
| LG Uplus vs. ABCO Electronics Co | LG Uplus vs. Kukil Metal Co | LG Uplus vs. Daejoo Electronic Materials | LG Uplus vs. SungMoon Electronics 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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