Correlation Between Korea Electronic and LG Display
Can any of the company-specific risk be diversified away by investing in both Korea Electronic 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 Korea Electronic and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Electronic Certification and LG Display, you can compare the effects of market volatilities on Korea Electronic 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 Korea Electronic with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electronic and LG Display.
Diversification Opportunities for Korea Electronic and LG Display
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Korea and 034220 is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electronic Certification and LG Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Korea Electronic 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 Korea Electronic Certification 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 Korea Electronic i.e., Korea Electronic and LG Display go up and down completely randomly.
Pair Corralation between Korea Electronic and LG Display
Assuming the 90 days trading horizon Korea Electronic Certification is expected to under-perform the LG Display. But the stock apears to be less risky and, when comparing its historical volatility, Korea Electronic Certification is 1.16 times less risky than LG Display. The stock trades about -0.16 of its potential returns per unit of risk. The LG Display is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,055,000 in LG Display on September 12, 2024 and sell it today you would lose (137,000) from holding LG Display or give up 12.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electronic Certification vs. LG Display
Performance |
| Timeline |
| Korea Electronic Cer |
| LG Display |
Korea Electronic and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electronic and LG Display
The main advantage of trading using opposite Korea Electronic and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electronic 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.| Korea Electronic vs. Korea New Network | Korea Electronic vs. Solution Advanced Technology | Korea Electronic vs. Busan Industrial Co | Korea Electronic vs. Busan Ind |
| LG Display vs. Cube Entertainment | LG Display vs. Dreamus Company | LG Display vs. LG Energy Solution | LG Display vs. Dongwon System |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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