Correlation Between PlayD and LG Display
Can any of the company-specific risk be diversified away by investing in both PlayD 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 PlayD and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PlayD Co and LG Display Co, you can compare the effects of market volatilities on PlayD 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 PlayD with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of PlayD and LG Display.
Diversification Opportunities for PlayD and LG Display
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PlayD and 034220 is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding PlayD 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 PlayD 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 PlayD 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 PlayD i.e., PlayD and LG Display go up and down completely randomly.
Pair Corralation between PlayD and LG Display
Assuming the 90 days trading horizon PlayD is expected to generate 1.75 times less return on investment than LG Display. In addition to that, PlayD is 2.04 times more volatile than LG Display Co. It trades about 0.02 of its total potential returns per unit of risk. LG Display Co is currently generating about 0.09 per unit of volatility. If you would invest 925,000 in LG Display Co on November 29, 2024 and sell it today you would earn a total of 29,000 from holding LG Display Co or generate 3.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PlayD Co vs. LG Display Co
Performance |
| Timeline |
| PlayD |
| LG Display |
PlayD and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PlayD and LG Display
The main advantage of trading using opposite PlayD and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PlayD 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.| PlayD vs. Silicon2 Co | PlayD vs. Jinro Distillers Co | PlayD vs. Echomarketing CoLtd | PlayD vs. Korea Alcohol Industrial |
| LG Display vs. Daishin Information Communications | LG Display vs. Lotte Data Communication | LG Display vs. Namhae Chemical | LG Display vs. Innowireless 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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