Correlation Between Alton Sports and LG Display
Can any of the company-specific risk be diversified away by investing in both Alton Sports 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 Alton Sports and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alton Sports CoLtd and LG Display, you can compare the effects of market volatilities on Alton Sports 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 Alton Sports with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alton Sports and LG Display.
Diversification Opportunities for Alton Sports and LG Display
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alton and 034220 is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Alton Sports CoLtd and LG Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Alton Sports 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 Alton Sports CoLtd 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 Alton Sports i.e., Alton Sports and LG Display go up and down completely randomly.
Pair Corralation between Alton Sports and LG Display
Assuming the 90 days trading horizon Alton Sports CoLtd is expected to under-perform the LG Display. But the stock apears to be less risky and, when comparing its historical volatility, Alton Sports CoLtd is 1.56 times less risky than LG Display. The stock trades about -0.08 of its potential returns per unit of risk. The LG Display is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 925,000 in LG Display on December 1, 2024 and sell it today you would lose (10,000) from holding LG Display or give up 1.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alton Sports CoLtd vs. LG Display
Performance |
| Timeline |
| Alton Sports CoLtd |
| LG Display |
Alton Sports and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alton Sports and LG Display
The main advantage of trading using opposite Alton Sports and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alton Sports 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.| Alton Sports vs. Samsung Electronics Co | Alton Sports vs. Samsung Electronics Co | Alton Sports vs. Naver | Alton Sports vs. SK Hynix |
| LG Display vs. Haesung Industrial Co | LG Display vs. Value Added Technology | LG Display vs. LEENO Industrial | LG Display vs. Digital Imaging Technology |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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