Correlation Between Finebesteel and LG Display
Can any of the company-specific risk be diversified away by investing in both Finebesteel 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 Finebesteel and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finebesteel and LG Display Co, you can compare the effects of market volatilities on Finebesteel 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 Finebesteel with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finebesteel and LG Display.
Diversification Opportunities for Finebesteel and LG Display
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Finebesteel and 034220 is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Finebesteel 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 Finebesteel 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 Finebesteel i.e., Finebesteel and LG Display go up and down completely randomly.
Pair Corralation between Finebesteel and LG Display
Assuming the 90 days trading horizon Finebesteel is expected to generate 2.48 times more return on investment than LG Display. However, Finebesteel is 2.48 times more volatile than LG Display Co. It trades about 0.29 of its potential returns per unit of risk. LG Display Co is currently generating about -0.03 per unit of risk. If you would invest 92,100 in Finebesteel on November 7, 2024 and sell it today you would earn a total of 14,400 from holding Finebesteel or generate 15.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finebesteel vs. LG Display Co
Performance |
| Timeline |
| Finebesteel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| LG Display |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Finebesteel and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finebesteel and LG Display
The main advantage of trading using opposite Finebesteel and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finebesteel 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.| Finebesteel vs. Eagle Veterinary Technology | Finebesteel vs. V One Tech Co | Finebesteel vs. Hanwha Chemical Corp | Finebesteel vs. Raontech |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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