Correlation Between LG Display and ITM Semiconductor
Can any of the company-specific risk be diversified away by investing in both LG Display and ITM Semiconductor 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 ITM Semiconductor 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 ITM Semiconductor Co, you can compare the effects of market volatilities on LG Display and ITM Semiconductor 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 ITM Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and ITM Semiconductor.
Diversification Opportunities for LG Display and ITM Semiconductor
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between 034220 and ITM is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and ITM Semiconductor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITM Semiconductor 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 ITM Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITM Semiconductor has no effect on the direction of LG Display i.e., LG Display and ITM Semiconductor go up and down completely randomly.
Pair Corralation between LG Display and ITM Semiconductor
Assuming the 90 days trading horizon LG Display Co is expected to generate 0.69 times more return on investment than ITM Semiconductor. However, LG Display Co is 1.45 times less risky than ITM Semiconductor. It trades about -0.08 of its potential returns per unit of risk. ITM Semiconductor Co is currently generating about -0.15 per unit of risk. If you would invest 941,000 in LG Display Co on October 16, 2024 and sell it today you would lose (31,000) from holding LG Display Co or give up 3.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. ITM Semiconductor Co
Performance |
| Timeline |
| LG Display |
| ITM Semiconductor |
LG Display and ITM Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and ITM Semiconductor
The main advantage of trading using opposite LG Display and ITM Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, ITM Semiconductor 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 ITM Semiconductor will offset losses from the drop in ITM Semiconductor's long position.| LG Display vs. Global Standard Technology | LG Display vs. Dong A Steel Technology | LG Display vs. HB Technology TD | LG Display vs. SK Telecom Co |
| ITM Semiconductor vs. LG Display Co | ITM Semiconductor vs. Playgram Co | ITM Semiconductor vs. Raontech | ITM Semiconductor vs. Amogreentech 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 Stocks Directory module to find actively traded stocks across global markets.
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