Correlation Between Hironic and LG Display
Can any of the company-specific risk be diversified away by investing in both Hironic 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 Hironic and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hironic Co and LG Display Co, you can compare the effects of market volatilities on Hironic 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 Hironic with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hironic and LG Display.
Diversification Opportunities for Hironic and LG Display
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hironic and 034220 is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hironic 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 Hironic 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 Hironic 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 Hironic i.e., Hironic and LG Display go up and down completely randomly.
Pair Corralation between Hironic and LG Display
Assuming the 90 days trading horizon Hironic Co is expected to generate 1.7 times more return on investment than LG Display. However, Hironic is 1.7 times more volatile than LG Display Co. It trades about 0.02 of its potential returns per unit of risk. LG Display Co is currently generating about -0.01 per unit of risk. If you would invest 586,363 in Hironic Co on October 14, 2024 and sell it today you would earn a total of 42,637 from holding Hironic Co or generate 7.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hironic Co vs. LG Display Co
Performance |
| Timeline |
| Hironic |
| LG Display |
Hironic and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hironic and LG Display
The main advantage of trading using opposite Hironic and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hironic 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.| Hironic vs. Korea Computer | Hironic vs. BIT Computer Co | Hironic vs. Ssangyong Information Communication | Hironic vs. Seers Technology |
| LG Display vs. J Steel Co | LG Display vs. SeAH Besteel Corp | LG Display vs. PJ Metal Co | LG Display vs. Hironic 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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