Correlation Between Hyundai Home and LG Display
Can any of the company-specific risk be diversified away by investing in both Hyundai Home 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 Hyundai Home and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hyundai Home Shopping and LG Display Co, you can compare the effects of market volatilities on Hyundai Home 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 Hyundai Home with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyundai Home and LG Display.
Diversification Opportunities for Hyundai Home and LG Display
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hyundai and 034220 is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hyundai Home Shopping and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Hyundai Home 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 Hyundai Home Shopping 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 Hyundai Home i.e., Hyundai Home and LG Display go up and down completely randomly.
Pair Corralation between Hyundai Home and LG Display
Assuming the 90 days trading horizon Hyundai Home Shopping is expected to generate 1.0 times more return on investment than LG Display. However, Hyundai Home Shopping is 1.0 times less risky than LG Display. It trades about -0.16 of its potential returns per unit of risk. LG Display Co is currently generating about -0.27 per unit of risk. If you would invest 4,735,000 in Hyundai Home Shopping on September 4, 2024 and sell it today you would lose (255,000) from holding Hyundai Home Shopping or give up 5.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hyundai Home Shopping vs. LG Display Co
Performance |
| Timeline |
| Hyundai Home Shopping |
| LG Display |
Hyundai Home and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hyundai Home and LG Display
The main advantage of trading using opposite Hyundai Home and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyundai Home 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.| Hyundai Home vs. AptaBio Therapeutics | Hyundai Home vs. Daewoo SBI SPAC | Hyundai Home vs. Dream Security co | Hyundai Home vs. Microfriend |
| LG Display vs. AptaBio Therapeutics | LG Display vs. Daewoo SBI SPAC | LG Display vs. Dream Security co | LG Display vs. Microfriend |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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