Correlation Between Total Soft and LG Display
Can any of the company-specific risk be diversified away by investing in both Total Soft 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 Total Soft and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Soft Bank and LG Display, you can compare the effects of market volatilities on Total Soft 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 Total Soft with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Soft and LG Display.
Diversification Opportunities for Total Soft and LG Display
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Total and 034220 is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Total Soft Bank and LG Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Total Soft 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 Total Soft Bank 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 Total Soft i.e., Total Soft and LG Display go up and down completely randomly.
Pair Corralation between Total Soft and LG Display
Assuming the 90 days trading horizon Total Soft Bank is expected to generate 1.33 times more return on investment than LG Display. However, Total Soft is 1.33 times more volatile than LG Display. It trades about 0.02 of its potential returns per unit of risk. LG Display is currently generating about -0.02 per unit of risk. If you would invest 433,000 in Total Soft Bank on September 2, 2024 and sell it today you would earn a total of 35,000 from holding Total Soft Bank or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Total Soft Bank vs. LG Display
Performance |
| Timeline |
| Total Soft Bank |
| LG Display |
Total Soft and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Soft and LG Display
The main advantage of trading using opposite Total Soft and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Soft 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.| Total Soft vs. Devsisters corporation | Total Soft vs. Konan Technology | Total Soft vs. Nice Information Telecommunication | Total Soft vs. InfoBank |
| LG Display vs. Dongsin Engineering Construction | LG Display vs. Doosan Fuel Cell | LG Display vs. Daishin Balance 1 | LG Display vs. Total Soft Bank |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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