Correlation Between LG Display and Cloud Air
Can any of the company-specific risk be diversified away by investing in both LG Display and Cloud Air 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 Cloud Air 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 Cloud Air CoLtd, you can compare the effects of market volatilities on LG Display and Cloud Air 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 Cloud Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Cloud Air.
Diversification Opportunities for LG Display and Cloud Air
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 034220 and Cloud is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Cloud Air CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloud Air CoLtd 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 Cloud Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloud Air CoLtd has no effect on the direction of LG Display i.e., LG Display and Cloud Air go up and down completely randomly.
Pair Corralation between LG Display and Cloud Air
Assuming the 90 days trading horizon LG Display Co is expected to generate 1.25 times more return on investment than Cloud Air. However, LG Display is 1.25 times more volatile than Cloud Air CoLtd. It trades about -0.05 of its potential returns per unit of risk. Cloud Air CoLtd is currently generating about -0.07 per unit of risk. If you would invest 1,056,000 in LG Display Co on November 7, 2024 and sell it today you would lose (149,000) from holding LG Display Co or give up 14.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Cloud Air CoLtd
Performance |
| Timeline |
| LG Display |
| Cloud Air CoLtd |
LG Display and Cloud Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Cloud Air
The main advantage of trading using opposite LG Display and Cloud Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Cloud Air 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 Cloud Air will offset losses from the drop in Cloud Air'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 |
| Cloud Air vs. Hanmi Semiconductor Co | Cloud Air vs. Dongbang Transport Logistics | Cloud Air vs. Seers Technology | Cloud Air vs. Alton Sports 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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