Correlation Between Xavis and LG Display
Can any of the company-specific risk be diversified away by investing in both Xavis 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 Xavis and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xavis Co and LG Display, you can compare the effects of market volatilities on Xavis 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 Xavis with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xavis and LG Display.
Diversification Opportunities for Xavis and LG Display
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xavis and 034220 is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Xavis Co and LG Display in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and Xavis 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 Xavis 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 Xavis i.e., Xavis and LG Display go up and down completely randomly.
Pair Corralation between Xavis and LG Display
Assuming the 90 days trading horizon Xavis Co is expected to under-perform the LG Display. In addition to that, Xavis is 1.68 times more volatile than LG Display. It trades about -0.47 of its total potential returns per unit of risk. LG Display is currently generating about -0.33 per unit of volatility. If you would invest 1,064,000 in LG Display on September 1, 2024 and sell it today you would lose (116,000) from holding LG Display or give up 10.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xavis Co vs. LG Display
Performance |
| Timeline |
| Xavis |
| LG Display |
Xavis and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xavis and LG Display
The main advantage of trading using opposite Xavis and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xavis 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.The idea behind Xavis Co and LG Display pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| LG Display vs. Dongsin Engineering Construction | LG Display vs. Doosan Fuel Cell | LG Display vs. Daishin Balance 1 | LG Display vs. Total Soft Bank |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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