Correlation Between Tway Air and LG Display
Can any of the company-specific risk be diversified away by investing in both Tway Air 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 Tway Air and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tway Air Co and LG Display Co, you can compare the effects of market volatilities on Tway Air 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 Tway Air with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tway Air and LG Display.
Diversification Opportunities for Tway Air and LG Display
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tway and 034220 is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Tway Air 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 Tway Air 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 Tway Air 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 Tway Air i.e., Tway Air and LG Display go up and down completely randomly.
Pair Corralation between Tway Air and LG Display
Assuming the 90 days trading horizon Tway Air Co is expected to under-perform the LG Display. In addition to that, Tway Air is 2.12 times more volatile than LG Display Co. It trades about -0.1 of its total potential returns per unit of risk. LG Display Co is currently generating about -0.13 per unit of volatility. If you would invest 1,036,000 in LG Display Co on August 29, 2024 and sell it today you would lose (43,000) from holding LG Display Co or give up 4.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tway Air Co vs. LG Display Co
Performance |
| Timeline |
| Tway Air |
| LG Display |
Tway Air and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tway Air and LG Display
The main advantage of trading using opposite Tway Air and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tway Air 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.| Tway Air vs. Busan Industrial Co | Tway Air vs. Busan Ind | Tway Air vs. Mirae Asset Daewoo | Tway Air vs. UNISEM Co |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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