Correlation Between Cosmax Nbt and LG Display
Can any of the company-specific risk be diversified away by investing in both Cosmax Nbt 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 Cosmax Nbt and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosmax Nbt and LG Display, you can compare the effects of market volatilities on Cosmax Nbt 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 Cosmax Nbt with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosmax Nbt and LG Display.
Diversification Opportunities for Cosmax Nbt and LG Display
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cosmax and 034220 is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Cosmax Nbt and LG Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Cosmax Nbt 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 Cosmax Nbt 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 Cosmax Nbt i.e., Cosmax Nbt and LG Display go up and down completely randomly.
Pair Corralation between Cosmax Nbt and LG Display
Assuming the 90 days trading horizon Cosmax Nbt is expected to generate 1.29 times more return on investment than LG Display. However, Cosmax Nbt is 1.29 times more volatile than LG Display. It trades about -0.04 of its potential returns per unit of risk. LG Display is currently generating about -0.06 per unit of risk. If you would invest 560,000 in Cosmax Nbt on September 12, 2024 and sell it today you would lose (255,000) from holding Cosmax Nbt or give up 45.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cosmax Nbt vs. LG Display
Performance |
| Timeline |
| Cosmax Nbt |
| LG Display |
Cosmax Nbt and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cosmax Nbt and LG Display
The main advantage of trading using opposite Cosmax Nbt and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosmax Nbt 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.| Cosmax Nbt vs. Korea New Network | Cosmax Nbt vs. ICD Co | Cosmax Nbt vs. DYPNF CoLtd | Cosmax Nbt vs. Solution Advanced Technology |
| LG Display vs. Cube Entertainment | LG Display vs. Dreamus Company | LG Display vs. LG Energy Solution | LG Display vs. Dongwon System |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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