Correlation Between SCI Information and LG Display
Can any of the company-specific risk be diversified away by investing in both SCI Information and LG Display 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 SCI Information and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCI Information Service and LG Display Co, you can compare the effects of market volatilities on SCI Information and LG Display 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 SCI Information with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCI Information and LG Display.
Diversification Opportunities for SCI Information and LG Display
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SCI and 034220 is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding SCI Information Service and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and SCI Information 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 SCI Information Service are associated (or correlated) with LG Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Display has no effect on the direction of SCI Information i.e., SCI Information and LG Display go up and down completely randomly.
Pair Corralation between SCI Information and LG Display
Assuming the 90 days trading horizon SCI Information Service is expected to generate 1.0 times more return on investment than LG Display. However, SCI Information Service is 1.0 times less risky than LG Display. It trades about 0.21 of its potential returns per unit of risk. LG Display Co is currently generating about -0.05 per unit of risk. If you would invest 219,500 in SCI Information Service on October 14, 2024 and sell it today you would earn a total of 16,500 from holding SCI Information Service or generate 7.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SCI Information Service vs. LG Display Co
Performance |
| Timeline |
| SCI Information Service |
| LG Display |
SCI Information and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCI Information and LG Display
The main advantage of trading using opposite SCI Information and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCI Information position performs unexpectedly, LG Display 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 LG Display will offset losses from the drop in LG Display's long position.| SCI Information vs. Hyundai Engineering Plastics | SCI Information vs. Taegu Broadcasting | SCI Information vs. Kolon Plastics | SCI Information vs. Hana Materials |
| LG Display vs. Eagle Veterinary Technology | LG Display vs. Lion Chemtech Co | LG Display vs. SEOWONINTECHCoLtd | LG Display vs. FNSTech 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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