Correlation Between LG Display and ZUM Internet
Can any of the company-specific risk be diversified away by investing in both LG Display and ZUM Internet 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 ZUM Internet 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 ZUM Internet Corp, you can compare the effects of market volatilities on LG Display and ZUM Internet 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 ZUM Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and ZUM Internet.
Diversification Opportunities for LG Display and ZUM Internet
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 034220 and ZUM is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and ZUM Internet Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZUM Internet Corp 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 ZUM Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZUM Internet Corp has no effect on the direction of LG Display i.e., LG Display and ZUM Internet go up and down completely randomly.
Pair Corralation between LG Display and ZUM Internet
Assuming the 90 days trading horizon LG Display Co is expected to generate 0.59 times more return on investment than ZUM Internet. However, LG Display Co is 1.71 times less risky than ZUM Internet. It trades about -0.19 of its potential returns per unit of risk. ZUM Internet Corp is currently generating about -0.12 per unit of risk. If you would invest 1,144,000 in LG Display Co on August 28, 2024 and sell it today you would lose (151,000) from holding LG Display Co or give up 13.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. ZUM Internet Corp
Performance |
| Timeline |
| LG Display |
| ZUM Internet Corp |
LG Display and ZUM Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and ZUM Internet
The main advantage of trading using opposite LG Display and ZUM Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, ZUM Internet 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 ZUM Internet will offset losses from the drop in ZUM Internet's long position.| LG Display vs. AptaBio Therapeutics | LG Display vs. Daewoo SBI SPAC | LG Display vs. Dream Security co | LG Display vs. Microfriend |
| ZUM Internet vs. Korean Reinsurance Co | ZUM Internet vs. Shinsegae Information Communication | ZUM Internet vs. Nice Information Telecommunication | ZUM Internet vs. Daejung Chemicals Metals |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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