Correlation Between LG Display and CS BEARING
Can any of the company-specific risk be diversified away by investing in both LG Display and CS BEARING 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 CS BEARING 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 CS BEARING CoLtd, you can compare the effects of market volatilities on LG Display and CS BEARING 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 CS BEARING. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and CS BEARING.
Diversification Opportunities for LG Display and CS BEARING
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 034220 and 297090 is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and CS BEARING CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CS BEARING CoLtd 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 CS BEARING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CS BEARING CoLtd has no effect on the direction of LG Display i.e., LG Display and CS BEARING go up and down completely randomly.
Pair Corralation between LG Display and CS BEARING
Assuming the 90 days trading horizon LG Display Co is expected to generate 0.57 times more return on investment than CS BEARING. However, LG Display Co is 1.76 times less risky than CS BEARING. It trades about 0.17 of its potential returns per unit of risk. CS BEARING CoLtd is currently generating about -0.12 per unit of risk. If you would invest 925,000 in LG Display Co on November 27, 2024 and sell it today you would earn a total of 57,000 from holding LG Display Co or generate 6.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. CS BEARING CoLtd
Performance |
| Timeline |
| LG Display |
| CS BEARING CoLtd |
LG Display and CS BEARING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and CS BEARING
The main advantage of trading using opposite LG Display and CS BEARING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, CS BEARING 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 CS BEARING will offset losses from the drop in CS BEARING's long position.| LG Display vs. System and Application | LG Display vs. Kisan Telecom Co | LG Display vs. Daishin Information Communications | LG Display vs. Lotte Data Communication |
| CS BEARING vs. National Plastic Co | CS BEARING vs. Haitai Confectionery Foods | CS BEARING vs. LAKE MATERIALS LTD | CS BEARING vs. Solus Advanced Materials |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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