Correlation Between LG Display and Kukil Metal
Can any of the company-specific risk be diversified away by investing in both LG Display and Kukil Metal 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 Kukil Metal 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 Kukil Metal Co, you can compare the effects of market volatilities on LG Display and Kukil Metal 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 Kukil Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Kukil Metal.
Diversification Opportunities for LG Display and Kukil Metal
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 034220 and Kukil is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Kukil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukil Metal 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 Kukil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukil Metal has no effect on the direction of LG Display i.e., LG Display and Kukil Metal go up and down completely randomly.
Pair Corralation between LG Display and Kukil Metal
Assuming the 90 days trading horizon LG Display Co is expected to under-perform the Kukil Metal. But the stock apears to be less risky and, when comparing its historical volatility, LG Display Co is 1.12 times less risky than Kukil Metal. The stock trades about -0.35 of its potential returns per unit of risk. The Kukil Metal Co is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 168,527 in Kukil Metal Co on October 24, 2024 and sell it today you would earn a total of 12,073 from holding Kukil Metal Co or generate 7.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Kukil Metal Co
Performance |
| Timeline |
| LG Display |
| Kukil Metal |
LG Display and Kukil Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Kukil Metal
The main advantage of trading using opposite LG Display and Kukil Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Kukil Metal 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 Kukil Metal will offset losses from the drop in Kukil Metal's long position.| LG Display vs. Hanwha Life Insurance | LG Display vs. Samsung Life Insurance | LG Display vs. ABCO Electronics Co | LG Display vs. Tway Air Co |
| Kukil Metal vs. Neungyule Education | Kukil Metal vs. Sempio Foods Co | Kukil Metal vs. BIT Computer Co | Kukil Metal vs. LG Display 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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