Correlation Between LG Display and Ecocab
Can any of the company-specific risk be diversified away by investing in both LG Display and Ecocab 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 Ecocab 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 Ecocab Co, you can compare the effects of market volatilities on LG Display and Ecocab 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 Ecocab. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Ecocab.
Diversification Opportunities for LG Display and Ecocab
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 034220 and Ecocab is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Ecocab Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecocab 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 Ecocab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecocab has no effect on the direction of LG Display i.e., LG Display and Ecocab go up and down completely randomly.
Pair Corralation between LG Display and Ecocab
Assuming the 90 days trading horizon LG Display Co is expected to under-perform the Ecocab. But the stock apears to be less risky and, when comparing its historical volatility, LG Display Co is 2.55 times less risky than Ecocab. The stock trades about -0.05 of its potential returns per unit of risk. The Ecocab Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 148,900 in Ecocab Co on December 4, 2024 and sell it today you would lose (12,900) from holding Ecocab Co or give up 8.66% 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. Ecocab Co
Performance |
| Timeline |
| LG Display |
| Ecocab |
LG Display and Ecocab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Ecocab
The main advantage of trading using opposite LG Display and Ecocab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Ecocab 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 Ecocab will offset losses from the drop in Ecocab's long position.| LG Display vs. KEPCO Engineering Construction | LG Display vs. Polaris Office Corp | LG Display vs. Hanmi Semiconductor Co | LG Display vs. Tuksu Engineering ConstructionLtd |
| Ecocab vs. Daishin Information Communications | Ecocab vs. Insung Information Co | Ecocab vs. Iljin Display | Ecocab vs. Sangsin Energy Display |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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