Correlation Between LG Display and Finebesteel
Can any of the company-specific risk be diversified away by investing in both LG Display and Finebesteel 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 Finebesteel 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 Finebesteel, you can compare the effects of market volatilities on LG Display and Finebesteel 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 Finebesteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Finebesteel.
Diversification Opportunities for LG Display and Finebesteel
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 034220 and Finebesteel is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel 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 Finebesteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finebesteel has no effect on the direction of LG Display i.e., LG Display and Finebesteel go up and down completely randomly.
Pair Corralation between LG Display and Finebesteel
Assuming the 90 days trading horizon LG Display Co is expected to under-perform the Finebesteel. But the stock apears to be less risky and, when comparing its historical volatility, LG Display Co is 2.32 times less risky than Finebesteel. The stock trades about -0.17 of its potential returns per unit of risk. The Finebesteel is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 93,100 in Finebesteel on October 26, 2024 and sell it today you would earn a total of 16,900 from holding Finebesteel or generate 18.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Finebesteel
Performance |
| Timeline |
| LG Display |
| Finebesteel |
LG Display and Finebesteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Finebesteel
The main advantage of trading using opposite LG Display and Finebesteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Finebesteel 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 Finebesteel will offset losses from the drop in Finebesteel's long position.| LG Display vs. KB Financial Group | LG Display vs. Shinhan Financial Group | LG Display vs. Hana Financial | LG Display vs. Woori Financial Group |
| Finebesteel vs. Youngchang Chemical Co | Finebesteel vs. LG Display Co | Finebesteel vs. Kyung In Synthetic Corp | Finebesteel 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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