Correlation Between LG Display and SCI Information
Can any of the company-specific risk be diversified away by investing in both LG Display and SCI Information 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 SCI Information 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 SCI Information Service, you can compare the effects of market volatilities on LG Display and SCI Information 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 SCI Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and SCI Information.
Diversification Opportunities for LG Display and SCI Information
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 034220 and SCI is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and SCI Information Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCI Information Service 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 SCI Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCI Information Service has no effect on the direction of LG Display i.e., LG Display and SCI Information go up and down completely randomly.
Pair Corralation between LG Display and SCI Information
Assuming the 90 days trading horizon LG Display Co is expected to generate 0.89 times more return on investment than SCI Information. However, LG Display Co is 1.13 times less risky than SCI Information. It trades about -0.01 of its potential returns per unit of risk. SCI Information Service is currently generating about -0.02 per unit of risk. If you would invest 1,216,242 in LG Display Co on September 26, 2024 and sell it today you would lose (272,242) from holding LG Display Co or give up 22.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. SCI Information Service
Performance |
| Timeline |
| LG Display |
| SCI Information Service |
LG Display and SCI Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and SCI Information
The main advantage of trading using opposite LG Display and SCI Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, SCI Information 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 SCI Information will offset losses from the drop in SCI Information's long position.| LG Display vs. AptaBio Therapeutics | LG Display vs. Wonbang Tech Co | LG Display vs. Busan Industrial Co | LG Display vs. Busan Ind |
| SCI Information vs. KB Financial Group | SCI Information vs. Shinhan Financial Group | SCI Information vs. Hyundai Motor | SCI Information vs. Hyundai Motor 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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