Correlation Between Hanwha Life and LG Display
Can any of the company-specific risk be diversified away by investing in both Hanwha Life 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 Hanwha Life and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanwha Life Insurance and LG Display Co, you can compare the effects of market volatilities on Hanwha Life 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 Hanwha Life with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha Life and LG Display.
Diversification Opportunities for Hanwha Life and LG Display
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hanwha and 034220 is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha Life Insurance and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Hanwha Life 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 Hanwha Life Insurance 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 Hanwha Life i.e., Hanwha Life and LG Display go up and down completely randomly.
Pair Corralation between Hanwha Life and LG Display
Assuming the 90 days trading horizon Hanwha Life is expected to generate 1.07 times less return on investment than LG Display. But when comparing it to its historical volatility, Hanwha Life Insurance is 1.76 times less risky than LG Display. It trades about 0.15 of its potential returns per unit of risk. LG Display Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 906,000 in LG Display Co on November 3, 2024 and sell it today you would earn a total of 19,000 from holding LG Display Co or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanwha Life Insurance vs. LG Display Co
Performance |
| Timeline |
| Hanwha Life Insurance |
| LG Display |
Hanwha Life and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanwha Life and LG Display
The main advantage of trading using opposite Hanwha Life and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanwha Life 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.| Hanwha Life vs. AptaBio Therapeutics | Hanwha Life vs. Daewoo SBI SPAC | Hanwha Life vs. Dream Security co | Hanwha Life vs. Microfriend |
| LG Display vs. Youngbo Chemical Co | LG Display vs. Lotte Data Communication | LG Display vs. KPX Green Chemical | LG Display vs. Tae Kyung Chemical |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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