Correlation Between Innowireless and LG Display
Can any of the company-specific risk be diversified away by investing in both Innowireless 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 Innowireless and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innowireless Co and LG Display Co, you can compare the effects of market volatilities on Innowireless 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 Innowireless with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innowireless and LG Display.
Diversification Opportunities for Innowireless and LG Display
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Innowireless and 034220 is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Innowireless Co and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Innowireless 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 Innowireless Co 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 Innowireless i.e., Innowireless and LG Display go up and down completely randomly.
Pair Corralation between Innowireless and LG Display
Assuming the 90 days trading horizon Innowireless Co is expected to generate 1.2 times more return on investment than LG Display. However, Innowireless is 1.2 times more volatile than LG Display Co. 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 1,864,000 in Innowireless Co on October 30, 2024 and sell it today you would earn a total of 381,000 from holding Innowireless Co or generate 20.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innowireless Co vs. LG Display Co
Performance |
| Timeline |
| Innowireless |
| LG Display |
Innowireless and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innowireless and LG Display
The main advantage of trading using opposite Innowireless and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innowireless 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.| Innowireless vs. Seoam Machinery Industry | Innowireless vs. Cuckoo Homesys Co | Innowireless vs. Dongwoo Farm To | Innowireless vs. GS Engineering Construction |
| LG Display vs. Hanwha Life Insurance | LG Display vs. Raontech | LG Display vs. Finebesteel | LG Display vs. Dongwoon Anatech 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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